Real estate acquirers must use the Cadastre reference value as the tax base

The determination of the tax base for the Transfer Tax, Documented Legal Acts and Business Activity Operations Tax (ITPAJD) has been defined by the Directorate General of Taxes (DGT). The criterion establishes a clear hierarchy for calculating the amount upon which the tax rate will be applied in real estate purchase and sale transactions.

What the DGT has ruled

The Directorate General of Taxes (DGT) has clarified that, in the transfer of real estate, the tax base shall be the reference value provided for in the Real Estate Cadastre regulations. However, this value is not absolute if a higher figure exists in the transaction. If the purchase price, the agreed consideration, or the value declared by the interested parties is higher than the reference value, the highest of these magnitudes must be taken as the tax base.

This criterion is based on current Cadastre regulations and the Recast Text of the Law on Transfer Tax, Documented Legal Acts and Business Activity Operations Tax.

What it means for you

This criterion has a direct impact on both individuals and companies conducting real estate transactions. If you acquire a home, a commercial premises, or land, you cannot use a value lower than the one assigned by the Cadastre to that property as the calculation base for the tax.

• If the purchase price is lower than the reference value: You must declare and pay the tax using the Cadastre reference value.
• If the purchase price is higher than the reference value: You must use the actual transaction price as the tax base.

For companies acquiring real estate for their economic activity, this provision conditions the settlement of taxes associated with the acquisition of real estate assets.

What should be done

Before formalizing any real estate transfer, it is necessary to verify the reference value assigned by the Cadastre to avoid errors in the self-assessment. In the event that the reference value is considered incorrect, the regulations establish that the only way to challenge it is through the rectification of the self-assessment or the appeal of the corresponding assessment. It is recommended to assess each transaction individually to ensure that the applied tax base is the correct one, based on the higher magnitude between the price and the Cadastre reference value.