GIPE Newsletter May 14th 2024

REAL ESTATE PROPERTY:

REFERENCE VALUE AND MARKET VALUE

The reference value in real estate operations is determined by the Cadastre through an analysis of sales and purchase prices by area, and is updated annually for all municipalities. It can be consulted on the Cadastre website through the following link:

https://www1.sedecatastro.gob.es/Accesos/SECAccvr.aspx

This value must not exceed the market value and is used as a minimum basis for taxation on taxes such as the Tax on Property Transfers and Documented Legal Acts (ITPAJD) and the Inheritance and Donations Tax (ISD), when the declared value is lower.

However, it has no impact on the cadastral value or the Real Estate Tax (IBI). It is important to consider this value when transferring a property, as it provides guidance on its value.

ALTHOUGH IT APPEARS AS A PREMISES…

A community of owners tried to challenge the change of use of a premises to housing made by an owner, but was unsuccessful. Although the right to private property allows a property to be used as the owner wishes, the limitations or prohibitions must be clearly established in the constitutive title or statutes and registered in the Property Registry to be effective against third parties. In this case, since there is no express prohibition in the constitutive title and considering the shortage of housing, the mere description of the property as “premises” does not prevent the change of use to housing.

TAXES:

MUNICIPAL CAPITAL GAINS AND TRANSMISSION WITHOUT PROFIT

A recent judgment by the Supreme Court makes it possible to claim the return of municipal capital gains paid in land transactions that did not increase in value, even in cases of final settlements.

This decision implies that the assessments are considered null and void, which allows a procedure to be initiated to request a refund of the tax, even if more than four years have passed since the assessment.

However, precautions must be taken, since past settlements that have already become final by court ruling cannot be appealed, and the ruling applies specifically to settlements issued by the Treasury, pending whether the courts will adopt the same criterion for self-assessments.

EXEMPTION FOR REINVESTMENT “AFTER THE FACT”

The Treasury considers that the reinvestment exemption must be expressly exercised when submitting the personal income tax for the year of the transfer of the home. Although the courts have divergent opinions, this official criterion implies that even before reinvesting, you must inform yourself about the amount you agree to reinvest and the profit that will be exempt. If this process is not followed and you choose to pay taxes on the gain without mentioning the reinvestment commitment, you lose the right to the tax incentive. However, some courts believe that this formal requirement should not prevent the application of the rollover exemption if it is rolled over within two years of the sale. In this case, you can rectify the personal income tax return for the year of sale and request a refund of the excess paid.

NOTARIAL PROCEDURES:

TELEMATIC DEED

It is now possible to sign deeds electronically thanks to the entry into force of a law that allows signing by videoconference. To do so, it is necessary to register on the “Citizen Notarial Portal” and obtain a valid electronic certificate. Once registered, you can choose the notary, request an appointment and begin processing the desired deed. Before the video conference, security measures are implemented. After signing, you receive a secure validation code (CSV) to access the authorized electronic copy.