# Hidden numbers in property taxes



## Lonely (Aug 11, 2012)

Found this interesting comment on idealista:




> lo que nadie te dice:
> 
> si compras hoy averigua cuánto te cobrará tu comunidad autónoma por impuesto de transmisiones.
> teoricamente debería ser el 7 o el 8% por ciento del valor de la venta... pero no es así.
> ...




Is that right?

Thank you


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## Guest (Nov 29, 2013)

Would you like to translate. I realise it is from an article but expatforum is English only as per forum rules. A link to where you found it would also help people in deciding its legitimacy.


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## gus-lopez (Jan 4, 2010)

" por ejemplo en andalucía, viene la junta y dice que lo que tu pagaste 100.000 para ellos vale 300 o 400 mil y entonces el impuesto se te transforma entre el 24 y el 32% de lo que realmente compraste"

basically yes. If you buy for 100k & it has a catastral value of 300-400k then they want the transfer tax on that amount, not what you paid.
chap on a local forum sold his place for 275k. Buyer had to pay tax on 675k , the catastral valuation.


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## Chopera (Apr 22, 2013)

Yes it happens a lot (it happened to us). Though I don't think there are that many extreme cases these days. At the start of the crash there were quite a few cases of catastral values still being priced to peak values while transaction prices were much lower, but this is meant to have been sorted out now. It's a bit like how council tax in the UK works - the council estimates the value of your house and taxes you accordingly, regardless of how much you actually paid for your house. The difference in Spain is most of the tax is paid when the house is purchased, while in the UK it is paid annually.


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## snikpoh (Nov 19, 2007)

Chopera said:


> Yes it happens a lot (it happened to us). Though I don't think there are that many extreme cases these days. At the start of the crash there were quite a few cases of catastral values still being priced to peak values while transaction prices were much lower, but this is meant to have been sorted out now. It's a bit like how council tax in the UK works - the council estimates the value of your house and taxes you accordingly, regardless of how much you actually paid for your house. The difference in Spain is most of the tax is paid when the house is purchased, while in the UK it is paid annually.



How has this been sorted? There have been NO revaluations in or around here for over 20 years. The cadastral values are still us unrealistic as ever and people are still being sent tax bills for the difference.

With the continued fall in prices, this problem will continue to get worse until the town halls etc. do something about the discrepancies.

The main reason (I suspect) for it's introduction was to stop people selling/transferring properties to their relatives (children typically) for, say, 1 euro and so avoiding lots of tax.


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## Lonely (Aug 11, 2012)

_shel said:


> Would you like to translate. I realise it is from an article but expatforum is English only as per forum rules. A link to where you found it would also help people in deciding its legitimacy.


sorry, here the link:

27 chalets nuevos muy baratos en españa — idealista.com/news/[chalets-nuevos-super-baratos]-20131118-[link]-[]-[]

It's just a comment by an anonymous user:

miércoles, 20 noviembre, 2013 - 00:25


wednesday, november 20, 2013 - 00:25

info's picture anonymous says

what nobody tells you:

if you order now you see how your autonomous community charged transfer tax. 
theoretically should be 7 or 8% percent of the value of the sale ... but it is not. 
andalusia eg, the board comes and says what you paid for them 100,000 worth 300 or 400 thousand and then the tax is transforms you between 24 and 32% of what actually purchased. ie:

as you must supply at least 20% so that the bank will finance the remaining 80%, you will find that in total you will have to provide 44 to 52% of the purchase price and you'll owe the 80% plus costs and interest mortgage .

this you will learn 2 or 3 months after making the purchase so that you have no chance of becoming cheated behind. 
this to you and you say real estate or banks because sell absolutely nothing.


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## Chopera (Apr 22, 2013)

snikpoh said:


> How has this been sorted? There have been NO revaluations in or around here for over 20 years. The cadastral values are still us unrealistic as ever and people are still being sent tax bills for the difference.
> 
> With the continued fall in prices, this problem will continue to get worse until the town halls etc. do something about the discrepancies.
> 
> The main reason (I suspect) for it's introduction was to stop people selling/transferring properties to their relatives (children typically) for, say, 1 euro and so avoiding lots of tax.


If there have been no revaluations in your area for over 20 years then the catastral values will probably still be lower than most transaction values, so I'd keep quiet about it 

I think the main reason for it was to prevent tax evasion in general.

Edit: here's a council that is lowering catastral values: http://www.velezmalaga.es/index.php?mod=noticias&id=2300


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## baldilocks (Mar 7, 2010)

It all comes about from the Spanish way of doing business. A wants to sell his house to B for, say 100k but agrees (on paper) to sell for only 60k and therefore only pays tax on the 60k the other 40k is passed in a "brown envelope" under the table and so doesn't figure in the official transaction - A has reduced his tax liability by a third.

On the downside, if B were to subsequently sell and can't make an arrangement with C because C won't play ball with the brown envelopes then B has to pay tax not only on the official profit but also on the 40k.

The authorities, know that the brown envelopes are passing around and, if the price on paper appears to be too low, they are chasing up the tax on what they think the price should be because they are clamping down on the tax dodging, and even if there is no brown envelope, they assume there is one.


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## 213979 (Apr 11, 2013)

It happened to us. Despite the fact that we reported the full price to the government, they still don't believe it. 

F&$% the corruption.


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## CapnBilly (Jun 7, 2011)

The values used by the Hacienda are calculated each year based on a formula published in a law (I think in 1996). They calculate a multiplier based on various things, including the last local catastral valuation. This multiplier is then applied to your catastral value, and you can work out the
value for transfer and/or succession tax. For some reason they are different. If the reported amount is below the value shown in the calculation, then this is when Hacienda ask you for some more money. In some regions (Valencia definitely) you can look online and work out the value. For other there is a list you can look at.

Interestingly, in the Valencian Supreme Court about 2 months ago, an appeal was granted against a demand for extra tax, as calculated above. However, the appeal was not on the basis that it was incorrect, it was on the basis that the Hacienda should at least go and look at the property in question, rather than just work it out from behind a desk.

Not clear yet what will happen as a result of this case.


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## snikpoh (Nov 19, 2007)

CapnBilly said:


> The values used by the Hacienda are calculated each year based on a formula published in a law (I think in 1996). They calculate a multiplier based on various things, including the last local catastral valuation. This multiplier is then applied to your catastral value, and you can work out the
> value for transfer and/or succession tax. For some reason they are different. If the reported amount is below the value shown in the calculation, then this is when Hacienda ask you for some more money. In some regions (Valencia definitely) you can look online and work out the value. For other there is a list you can look at.
> 
> Interestingly, in the Valencian Supreme Court about 2 months ago, an appeal was granted against a demand for extra tax, as calculated above. However, the appeal was not on the basis that it was incorrect, it was on the basis that the Hacienda should at least go and look at the property in question, rather than just work it out from behind a desk.
> ...



The way they carry out the calculation is fine, but it does NOT take into account the fall in property values in recent times.

If they altered the multiplier each year then this would surely be a start.

Our IBI bill has gone up consistently for the past 8 years whilst property values have gone through the floor - how can they justify keeping the cadastral values and/or the multipliers as they were so long ago?


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## zenkarma (Feb 15, 2013)

snikpoh said:


> ...how can they justify keeping the cadastral values and/or the multipliers as they were so long ago?


They don't have to justify it. They want it that way and have no incentive/motivation to want to change it because to do so would reduce their tax intake. Not something they want to do.

People also wrongly assume that the cadastral value of a property is based or somehow linked to the _market value_ of the property itself—it isn't. It's based on the perceived _land value_ the property sits on.

The local authorities will argue that as they continue to improve the surrounding infrastructure of the land, eg road access, motorways, street lighting, refuse disposal, internet access and so on, this also increases the value of the land, hence the increases in cadastral value.


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## gus-lopez (Jan 4, 2010)

Chopera said:


> Yes it happens a lot (it happened to us). Though I don't think there are that many extreme cases these days. At the start of the crash there were quite a few cases of catastral values still being priced to peak values while transaction prices were much lower, but this is meant to have been sorted out now. It's a bit like how council tax in the UK works - the council estimates the value of your house and taxes you accordingly, regardless of how much you actually paid for your house. The difference in Spain is most of the tax is paid when the house is purchased, while in the UK it is paid annually.


Unfortunately there is in Andalucia. They revalued in 2007 & most people selling have catastral values 5x+ the selling price. There have been many appeals against it that have gone in owners favour. One woman on another forum appealed against it, & won, as she was continually getting buyers pull out when they realised they'd be looking at an additional 70-80k euros in tax .

snikpoh, You 've never been able to sell to the kids for a reduced value. Or anyone else for that matter. It always goes on catastral value or selling price or the Previous purchase price for tax liability. If you give it to them then YOU are liable for 'gift tax' which is payable at the same rate & same conditions as inheritance tax. Huge.


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## CapnBilly (Jun 7, 2011)

snikpoh said:


> The way they carry out the calculation is fine, but it does NOT take into account the fall in property values in recent times. If they altered the multiplier each year then this would surely be a start. Our IBI bill has gone up consistently for the past 8 years whilst property values have gone through the floor - how can they justify keeping the cadastral values and/or the multipliers as they were so long ago?


 The catastral value goes up each year, by an inflation factor published by the government, so it will always increase each year.


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