mikeglover

I have heard that some homeowners have been landed with a bill for extra property tax. The authorities evidently decide that the property was worth more than it was actually purchased for (about 5 years ago) despite having agreed that the price was acceptable at the time. I have heard in some of the papers that the authorities have been using a valuation formula that an actuary would find difficult to understand. Is this true and how widespread is it?

Fred James

Perfectly true.

They use a very simple formula that a 10 year old could understand.

They take the current Catastral value and multiply it by a factor depending on the town.

That becomes the minimum value that they will accept for tax purposes. If you disagree you can appeal it but it takes time and costs money.

In some regions they even have an online calculator where you enter the Catastral value and location and it will give the value - no actuary involved!

Dick Dasterdly

It has been pretty much the norm for many years, whilst big fat brown envelopes were changing hands and false figures shown in the escrituras, but I understand that such practices have mostly stopped now due to tighter govt money regulations, so likewise I expect the extra property tax should now rarely be necessary.

avocados

Actually,

That's not the case at all!
If they used the catastral value and multiplier, there wouldn't be any issue.

They are now using valor tasacion at time of purchase, which can be considerably higher than the acual purchase price paid. Hence the reason for retrospective collection of taxes.

If a mortgage was used for the purchase, the mortgage valor tasacion will be used for the calculation of taxes due.

The catastral value is now only used for calculation of Plus Valia.

mikeglover

i agree thats what they had been doing when the purchaser initially purchased the property and paid tax on that value. However, i had heard that the authorities had then come back a few years later and recalculated the initial property value on a different basis that then resulted in a higher value and the owner was now told that they had to pay tax on the difference in 'purchase values'

bobd22

Is this not a case of where people paid a large amount of black money hence fiddling and now they want the tax they were realy due? If this is the case then suppose little point complaining.

mikeglover

i agree entirely but i read that the increases were to figures higher than what had been originaly agreed with the Agencia Tributoria and even higher than the advertised 'for sale' prices in some cases.

Fred James

No it is happening frequently now (should you actually manage to sell). It is nothing to do with black money, it is the fact that now actual prices have dropped, the official prices are higher than the actual sale price.

As far as I am aware they do use a figure based on the Catastral value but they may well use a factor from previous years.

lurchio

Yep, had experience of this myself! It seems that irrespective of the price you pay (and pay tax on) if the Powers that be decide that basically you got it too cheap, they impose an new valuation and hand you a bill for the balance in tax. This is happening to locals and ex pats.
You have a choice, suck it up and ask for the payments to be spread (normally over 12 months, with a small interest charge) or dispute it, which involves basically lodging what you owe and fighting to get some of it back. Then its valuations from both sides (costs are yours) and the dispute continues. You will probably have to be represented.

I was billed for 2500 euros that way, and balancing everything together decided to ask to spread the payments. All cases are different, however!

Don't forget, costs to fight AND THE STRESS of hammering away from the UK versus real world approach. Anyway, I didn't WANT them to see the house I bought in case they went for more to be perfectly honest.
It was a bargain, so I took the matter on the chin.

As was said, its happened as a result of previous 'cooking the books' and under-declaring to save tax, etc.

Dick Dasterdly

So basically what appears to be a bargain buy, might turn out to be nothing of the sort once the tax man has had whatever he considers to be his pound of flesh and property purchasers will never know exactly what total cost they are going to end up paying.

Don't suppose that will do the property market much good if it becomes common knowledge amongst all would-be buyers.

lurchio

It looks that way, however........ its only the TAX on the differential values you pay,(i.e. what you gave as opposed to what THEY think you should have) about 8 to 12 percent I believe. As I said, the house will still be a bargain in real terms, its just that you will have to be prepared to top up the Hacienda if they look at it, and they ARE at the moment, so it is a factor I think everyone has to take into account when buying to be honest.

I know they trawl the Agents websites to find the house you bought to get the asking price, etc and then do the maths based on their equations.

One thing also to consider (as I was told by my Gestor) is that IF you sell at a future date (God help you at the moment, I know) you pay tax as a seller on the amount you sell it for against the amount you have paid the full tax on as an accumilated figure (the original 'deal' plus the equivalent amount in taxable value demanded afterwards), so thats important as well at sale time.

In other words theres no double win for the taxman at that point.

I won't be selling, but do not need the hassle at a later date, when I am not working to pay for it, as I am now!

They do it to the Spanish as well.

So yes, its buyer beware at the moment by the looks!

mikeglover

What if they come back for 'top up' tax after the original buyer sells - will the original buyer be liable (as they are the one who effectively benefited by paying less tax than they , in the authorities eyes, should have paid) or will it be the poor current owner who has done nothing wrong and, at the time of purchase, a notaire simple probably showed no debts on the property. i.e. does the debt remain with the house? When we bought our place, the notaire simple showed up no outstanding debts (the seller paid the bills, got receipts from the bank, completed the sale, and then went to the bank within 14 days and cancelled the payments). We also got a bill from Jumilla town hall for some meeting they had had with the sellers architect years previously and forgot to send it out to the previous owner so, because they had forgot to raise it untill years later, it didnt figure as a debt on the notaire simple.

mikeglover

Further, next time i go to Mercadona and get 2 bottles wine for the price of 1 (and pay the correct amount of iva on the price i have paid), will the authorities come after me in a few years time and say that as i got such a bargain, i must now pay the iva on the free bottle ?

jackytoo

It has always happened that they can come back for extra tax on some figure I think they draw out of the hat. In 1995 we bought 2 houses on a golf complex in marbella. They had never been lived in and had stood completed but empty for 6 years! Originally they had been on sale at £100,000 each equivalent. We bought them for £55,000 each from Banco Urquijo, a private merchant bank. We paid the bank the full price, no black money. About 3 months later we received an additional demand for about £1700 per house which was for 7% property tax on their assumed price.

You can appeal but still have to pay the amount first plus the cost of an official Tasador and probably a lawyer to do it for you. As you can imagine, it is rare for anyone to win. So we paid up. We were happy with our bargains and still got a good deal. Just something to be aware of. I would think it unusual for them to come back after a year or so.

I think it is different now as you can get their official price before purchasing.

Longlegpete

A good Lawyer will make you aware of this tax due so will good agents, as long as they have the Valor Catastral and the multiplier for your district it can be worked out,if they haven't they are not doing there job.
The multiplier figure will be based on the last revision of the Valor Catastral, the more recent the revision the lower the figure, get your Lawyer to pay it at the same time as the rest of the tax and you have no interest to pay, you can wait if you wish, you may not get a demand but you more than likely will