Property cadastral value and reference value
Do you have doubts about the difference between the cadastral value and the reference value? Below, we try to clear them up.
What is the cadastral value?
The cadastral value is an administrative figure set objectively for each real estate property, resulting from the application of the valuation criteria of the corresponding municipality.
To determine the cadastral value of a property, the following aspects are considered above all:
The location of the property, the planning factors affecting the land and its suitability for production.
The cost of actual construction, the contractor’s profit, professional fees and taxes that apply to the construction, use, quality and building age, as well as the historical-artistic nature or other conditions of the buildings.
Production expenses and benefits from the business activity of development, or the factors that apply in cases where such development does not exist.
The circumstances and market values of the land, the value of the construction, and production expenses and benefits from the business activity of development.
The cadastral value of properties may not exceed the market value. To that end, by ministerial order a reference coefficient to the market of 0.5 was set at the time the report was approved and entered into force. For real estate properties with a sales price limited administratively, the cadastral value may under no circumstances exceed that price.
Cadastral values can be updated annually by applying coefficients approved by the corresponding General State Budget Laws.
What is the reference value?
The reference value of each property is used to determine the taxable base for the Taxes on Property Transfers and Documented Legal Acts and on Inheritance and Gifts.
When a property transfer transaction is subject to one of these taxes, the reference value of that property will be the taxable base of the corresponding tax.
The reference value may not exceed the market value. To achieve this, factors for reducing it are used in its determination, so that using it as the taxable base does not mean an increase in the tax burden.
If the declared value, the price or the consideration paid are higher than the property’s reference value, the greater of the amounts will be used as the taxable base.
So, the property’s reference value will be the minimum taxation base for these taxes.
In addition, in the event of ITP and AJD being applicable in the form of legal acts for the first copies of public deeds relating to properties, when the taxable base is determined based on their value, it may not be less than the reference value.
Finally, when the reference value has been the taxable base for the tax that applies to the acquisition of a property, it will be taken into account when applying the rule for determining the taxable base of the Wealth Tax to which, where applicable, the person is subject. Therefore, the reference value can only affect the Wealth Tax with regard to properties acquired from 1 January 2022 onwards, in no case the pre-existing assets.
Differences between cadastral value and reference value
The cadastral value of properties is, where applicable, updated by the General State Budget Laws and serves as the taxable base for the Property Tax (IBI). It is protected information, so it is not published, and for urban properties its review takes place within the framework of collective valuation procedures.
The reference value of properties is determined year by year, simultaneously in all municipalities, and will be used to determine the taxable base for the Taxes on Property Transfers and Documented Legal Acts, and on Inheritance and Gifts. It is not protected information, and is permanently published on the Electronic Headquarters of the Land Registry Office.
Source: Land Registry Office (Catastro)
