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As we have mentioned on previous occasions, in Spain, when buying and selling a property, a series of taxes must be paid as a consequence of the transaction.

The last two years have been particularly hard for the real estate sector, due to the ups and downs of the sector, the need for some individuals to get rid of their properties or the impossibility for many owners to travel to the countries where they own real estate, which has led to a high number of transactions.

In this sense, since the beginning of the year 2022 a new anti-fraud law has been introduced which is really causing great changes in this type of taxes and the calculation of the amounts to be paid, since the most outstanding novelty is the new reference value of “catastro” and which will be the basis on which this type of taxes will be calculated in the cases of inheritance, donation or purchase and sale.

With this change of law, we can say that we will no longer pay taxes based on the price of the transaction, but on its market value.

What is this new value and how is it calculated?

First of all, we must not confuse this new value with the cadastral value.

For the calculation of the new value, and therefore the payment of taxes, the calculation will be made on the basis of the prices of the real estate transactions, which must be carried out and registered before a notary and according to the cadastral characteristics of each property.

Therefore, the new market value of the property will be calculated on the basis of the information provided by the Notaries and Registrars, without the need to visit the property, nor any report on its state of conservation, materials used, recent reforms or whether it is necessary to be able to inhabit the property.

How does the reference value affect taxes?

From now on taxes will be paid on the higher value between the agreed price and the reference value. Therefore, if the agreed price is higher than the reference value, the latter will not be affected at all and we will pay the same tax as before this new law.

What happens when we buy for a lower value than the reference value?

We must pay tax based on the reference value and not on the purchase price.

In very particular cases in which it can be demonstrated by means of an architect’s report that the conditions in which the property is found for its habitability are much inferior to those of a normal property, taxes could be paid on the agreed price. In these cases the administration could accept it or not, in which case, if we think we are right, we would have to go to court against the administration, so unless the deterioration of the property is very clear, it is not worth going down this road.

Please do not hesitate to contact us and we will help you on everything you need.