Cadastral Reference Value

As of January 2022, Spain implemented a new minimum tax value in property conveyance, inheritance and gifting known as the cadastral reference value. As this value nowadays in most cases is significantly higher than before, it´s important to have your lawyer investigate this matter before you commit to any property transaction.

Why do I need to know the Reference Value of the Cadastre when buying a property?

Within every property purchase in Spain you should take the official Reference Value into account. The reason is that it´s the official minimal tax value, which means that if it´s higher than the value in the deeds, you´ll need to pay your taxes over this value instead. This might come as an unpleasant surprise, especially for someone that for example already has paid a 10% down payment for a property. In certain cases someone even could have decided to go for another property with less total costs.

To which property taxes does this value apply?

When buying an existing property in Andalusia you mostly pay 7% ITP transfer tax, so this might make a huge difference. The Reference Value nowadays is based on the prices of property sales in the area, so it resembles an official valuation much more realistically. But it also can mean that the value can lie significantly above your purchase price, especially when you have negotiated well.

Within an inheritance -if applicable- you pay inheritance tax over this amount and the same goes for gifting tax.

Reference value of the Cadastre versus Cadastral Value

Because the reference value is relatively new, sometimes this term get mixed us with the Cadastral Value, which also still exists. However, the Cadastral Value has other tax purposes. For example, it´s still used as the base for the IBI local property tax. Neither is the reference value used for the Capital Gain Tax of someone that´s transferring a property in a sale or gift/donation.

What if there´s no Reference Value?

Certain properties don´t have a reference value. In this case your lawyer can advise you about your tax strategy within his Due Diligence legal investigation. For example rural properties don´t tend to have a Reference Value and your lawyer will therefore indicate if the price in the deeds can be used or not.

What if this Spanish minimal fiscal value is unreasonably high?

Of course, no one want to pay more taxes than necessary and in certain cases the difference between the purchase price and the (extremely) higher Reference Value, might be worth a dispute with the Spanish tax office. In this case, your lawyer will inform you about the correct procedure and potential risks. In the past we´ve handled several of these cases successfully.

Fiscal advice for your property transfer by C&D Solicitors

C&D Solicitors is a law firm specializing in conveyance property law and inheritance law with experience since 2006. We provide advice on the purchase, sale, inheritance and gifting of properties to foreign clients, whether resident or non-resident. Our colleagues speak English, Dutch, Swedish, German and French.