Valuation of your property by the municipality

Verifying the value of your property

24 / Apr

The verification of the value of the purchased property is every homeowner’s nightmare.

In fact, it is a form of reviewing the value of the property, within four years of purchase, on which the Autonomous Community (Comunidad Autónoma, or CA) wants to rely to levy more tax than you already paid when you bought the house in the form of transfer tax.

Let’s explain with an example. If you bought the property for €100,000 and you paid the transfer tax on this amount, but the CA believes that the property is worth €120,000, they will claim the transfer tax on the difference of €20,000.

How does value verification work?

To have a value verification, the CA must first notify you of the opening of the value verification file and the date when their architect will visit the house. You have the right to be present at the architect’s inspection and the architect must base his valuation on the inside and outside of the house.

This is where the first problem begins. If you buy a house that is in ruins and after three years of renovation, the architect comes by for an appraisal, the value of the house will not be the same as at the time of purchase. One way to counter this problem is to have an official valuation done at the time of, or just before, the purchase. If you are buying with a mortgage, you already have that valuation in hand.

After the visit, the CA will issue a liquidation proposal in which they will advise you on the value they want to apply for the purpose of transfer tax liquidation. This liquidation proposal must be specific, reasoned and based on the valuation carried out on the property during the visit.

In other words, the valuation should be based on the actual details of the property and not a simple verification of the sale prices of nearby properties without considering the details of the purchase on which they want to apply additional taxes.

A justification may not only contain an explanation of the applicable legislation but should also include an application of that legislation to the case, considering the circumstances of the case. In practice, administrative bodies use standardized templates that are hardly individualized, so you can challenge the valuation.

The role of reference value in value control

There is a simple way to avoid a value check by the CA: declare transfer tax for a value equal to, or higher than, the reference value. Click here to read more about the reference value.

If you pay the tax on the reference value while it is higher than the purchase price, the CA will not review the value of the property. In fact, the law states that they cannot check the value if you use the reference value.

A little nuance: you should note that the law says you must use the highest value between the reference value and the purchase value. So, you cannot use the reference value if the purchase value is higher. If you do, the CA (or even the land registry itself) may point it out to you and claim tax on the purchase value.

The conflicting valuation

Once you receive the levy, you have the right to request a conflicting valuation. With this appraisal, you send an appraiser of your choice to the property to perform a second appraisal with the aim of reducing the value of the property from the value set by the CA.

You can choose to have the valuation done directly and include it in the objection to the liquidation, or, if your objection is based on other evidence, you can reserve the right to have the conflicting valuation done. It is important to give notice of the intention to have the counter-assessment carried out in the first claim, as under the law this is the only time it can be requested.

Selena Escandell