Real estate acquirers must declare the higher of the reference value or the purchase price

The determination of the tax base in real estate transfers has raised doubts following the implementation of the Cadastre's reference value. Recently, the General Directorate of Taxes (DGT) has clarified the applicable criteria for calculating the Transfer Tax and Documented Legal Acts Tax (ITPAJD).

What the DGT has ruled

The ruling establishes that, for the transfer of real estate, the tax base shall be the reference value determined by the cadastral administration. However, this value is not absolute: if the price agreed upon in the deed or the value declared in the transaction is higher than the reference value, the higher amount must be used to calculate the tax.

Furthermore, the DGT clarifies that when the transaction affects two or more different registry and cadastral properties, the tax base will not be calculated globally, but will be determined for each one independently, applying the higher amount criterion in each particular case.

What this means for you

If you are an individual acquiring real estate, you must be aware that the fiscal cost of the transaction will not always be the price you pay for the property. If the Cadastre's reference value is higher than the purchase price, the tax will be calculated based on that cadastral value.

This criterion implies that the tax burden may be higher than initially anticipated during the purchase negotiations. Additionally, the independence of the properties means that, in properties composed of several cadastral units, each could have a different reference value, requiring an individualized calculation for each part of the property.

What you should do

Before formalizing the purchase deed, it is necessary to verify the reference value of each property in the Cadastre's Electronic Office. This will allow you to know exactly the real tax base and the amount of tax to be paid.

In the event that the reference value proves to be excessive or does not reflect the reality of the property, affecting legitimate interests, the regulations allow for a request to rectify the self-assessment through the corresponding challenge, in accordance with the provisions of the General Tax Law.