The new reference value of homes for property taxes

How much will you pay if a property is inherited, received as a donation or purchased? Learn the latest property tax news in Spain.
In this article you will learn the average value of real estate transactions that will determine the tax increase that the Government is preparing for the coming year.

From 1 January 2022, the Treasury is going to use the new reference value of homes when applying the following taxes: Inheritance and Donations, Transfer of Property and Documented Legal Acts (ITP) and Wealth. In other words, if a property is inherited, received as a donation or purchased, the new value will be applied when calculating mentioned taxes.
Barcelona districts vews
This reference value will be established by the Administration and will be calculated taking into account the price of the last transactions carried out in the area. Specifically, it will be based directly on 563,309 sales and purchases registered by notaries in the first three quarters of 2021.

Until December, the Cadastre will not publish the reference value for each property, but the prices, on which it is based, are already available and can be consulted on the map.

The Cadastre has divided the Spanish municipalities into areas of valuation, which do not coincide with neighbourhoods or districts. These are areas in which the prices of homes are considered to be similar and are given an average value.

How can prices be consulted?

There is a collection of data for the whole country, except for the Basque Country and Navarre because they have their own cadastres. Thus, the map of values published by the Cadastre offers a very detailed info of the Spanish real estate market. To consult the figures throughout Spain, the first thing to do is to close the search engine tab (because it is not yet active in the cadastral headquarters) and below it appears a map of Spain on which you can consult the prices simply by zooming in (with the + and -, located at the bottom right) on the areas in which you are interested.

One of the main criticisms of this new method of valuation is that it is massive and very generic. For example, in Madrid's Montecarmelo neighbourhood (in the north of the capital), a price of €3,940 per square metre is given as the basis for calculating the reference value for taxation after a purchase or donation of any home. In this way, in a 10-storey building, all the properties are equalised, when in the market the ground and the top floor do not cost the same, as the price rises with the height. Furthermore, the valuation does not go into the details of each apartment, nor does it analyse whether it has been refurbished or what qualities it has been built with.

In the previous case, the price corresponded to a neighbourhood, but if we take central parts of the capital, the average value is even reduced to streets or a specific corner. This is the case of the confluence of Calle Alcalá and Serrano, where the price rises to €9,440 for sq m, the highest in the city.

Going up Calle Serrano from this square, the second building on both pavements already has another average price, which drops to €7,290. That is to say, from one portal to another, the value used by the Treasury to apply its taxes may vary, and this will depend on the evolution of sales in the area in the previous year.

Another hot spot in terms of price, according to the Cadastre data, is the axis that runs from Plaza de Cibeles to Plaza de Gregorio Marañón but, above all, on the right bank (in the Salamanca neighbourhood). This section, which includes Paseo de Recoletos and part of Paseo de la Castellana, has a price of €8,200 per m2, while on the opposite side of the street it goes down to €7,850 per m2 (in the part closest to Cibeles) and €7,450 per m2 (between Plaza de Colón and Gregorio Marañón).

In addition, in areas where there are single-family houses rather than apartments, the Cadastre's value map calculates the average value of the representative house. For example, continuing with Madrid, in part of the residential neighbourhood of Puerta del Hierro, the price for a property is 2.2 million euros, and in La Moraleja (Alcobendas), 4.5 million.

The figures are not limited to large cities, but are available for all types of municipalities. Thus, if one of the more than 6,000 citizens of the Salamanca town of Peñaranda de Bracamonte wants to know what price per square metre is going to be taken as the starting point for tax charging, they can also do so. In this town, the average value ranges between €480-540 per m2.

These prices are only a starting point

These prices, which can already be consulted, are only the basis on which the Cadastre will calculate the final reference value. They apply a corrective factor to these prices in accordance with current cadastral regulations (taking into account some aspects such as the age of the property) and a reduction coefficient of 0.9 which means a reduction of 10%.

The aim of this reduction is to bring the reference value below the market price, although experts warn that as it is such a small discount, it will often not fulfil its purpose and the reference value may be higher than the real value. In other words, there will be cases in which a person will buy a house for € 150,000 and the town hall will tell them that it is worth €200,000, so they will have to pay tax based on the latter amount.

Learn more about Spanish Taxes and Laws in our blog
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