New Property Law from January 1st 2022
If you’re thinking of buying a house in 2022 or you’re inheriting, read below how the new way of calculating taxes will affect you.
New Law – How it will affect taxpayers.
From the 1st of January 2022, the new Spanish Anti-Fraud Law will come into force, this will affect amongst other things, the reference values that are taken for the calculation of the amounts to be paid in the transmission tax, and also in the inheritance / donation tax. Official information has not yet been published, but the government is already talking about the rise in these values.
New “reference values”, will we pay more taxes?
Until now, for the purchase of a second-hand house, an inheritance or donation, we pay the corresponding tax, based on the “Real Value” (or the value that appears in the deed if it is higher). The administration now considers that this “real value” as a fairly abstract value, and ultimately always ends up approaching the cadastral value, which is “lower”.
However, from the 1st of January of 2022, due to the approval of the new Anti-Fraud Law, it seems that these “Reference Values” will be modified and they will be closer to the market value, as it seems that they consider that the current values are not close to reality and are usually lower.
Where will these new values come from?
The values will come from the General Directorate of Cadastre, and will be “calculated” taking into account real transactions already carried out, information from the notary’s office, registries, town halls and any other data from the Cadastre.
That is, and to be understood, they will use as a reference purchases / inheritances / donations that have taken place and with all that information they will create the new “reference values”.
Will it be a calculation adjusted to reality?
It is still too early to know how they are going to proceed with the specific calculation. These new reference values, as we have already said, are going to be taken with information from other real transactions, but without taking into account the specific conditions of each house, such as whether it is renovated or not. That is, there will be no visit to the particular home to take into account the particular conditions. Is this fair for such a high tax?
Well, maybe not, but it will be covered by the so-called “iurus tantum”, that is, it admits proof to the contrary. Therefore, they leave you the possibility to appeal if you can provide evidence to the contrary to show that your home does not meet the assigned value.
Where can we check these values in particular?
From the 1st of January2022 , we will be able to find these values on the Cadastre website, and in addition, they will be published in the BOE (Official State Spanish Bulletin) on the first 20 days of December by the General Directorate of Cadastre. These values will be updated every year.
What taxes will this change in values affect?
The new reference values will affect the Transmission Tax (second-hand home purchase), the Inheritance and Donations Tax, and the Wealth Tax.
It is clear that this new law and this change in reference values is all about to combating tax fraud, and that we do not pay less than we should. But will these values be adjusted to what we “should” pay?
We will have to wait to have more official information, since at the moment there is next to none, to value these reforms and check if the intentions are adequate and if not, it will end, as almost always, damaging the same party.
But for now, it seems clear that we are going to move from a system where the taxpayer declares and pays, and the administration verifies that it is correct, to a system where the Administration tells you what you have to pay and you need to appeal.
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