Limits on real estate values in the supplementary self-assessment of Inheritance and Gift Tax

The valuation of real estate in Inheritance and Gift Tax (ISD) is a critical aspect following the implementation of the Cadastral reference value. Recently, the General Directorate of Taxes (DGT) has clarified the limitations that exist when attempting to rectify such valuation through a supplementary self-assessment.

What the DGT has ruled

The query concerned the possibility of rectifying the valuation of an inherited property so that it would adjust to the economic reality of the asset. The DGT's criteria determine that the taxable base of a property must be the Cadastral reference value, unless the value originally declared is higher than this.

In the event that the initially declared value is lower than the reference value, the taxpayer is obliged to submit a supplementary self-assessment to cover the difference and reach the Cadastral value. However, the Administration establishes a limit: if the value declared in the original self-assessment was not already higher than the reference value, it is not possible to record a value higher than the Cadastral value in the supplementary declaration.

What this means for you

This criterion directly affects individuals who have inherited real estate and wish to correct the value declared in the deed to reflect a higher market value. If your intention is to increase the property valuation to adjust it to the economic reality, current regulations prevent the supplementary self-assessment from exceeding the Cadastral reference value, provided that the initial declaration was lower than said parameter.

What you should do

When faced with the need to manage the valuation of assets in an inheritance, it is fundamental to consider the following points:

• Verify if the initially declared value is lower than the Cadastral reference value.
• Understand that the primary purpose of the supplementary self-assessment is to reach the reference value, not to exceed it.
• Assess each particular situation, as the application of the regulations depends on the initial valuation recorded in the tax return.