Property Transfer Tax (I.T.P) - how calculated?
Sorry if this is a basic question. I can't find the answer by googling so thought I'd ask in here instead.
The above tax is paid by the buyer of a resale (or secondhand) property at a rate of around 8% of the property's value. Is this calculated on the price that is paid for the property, or some other valuation? I remember hearing some time ago about people being forced to pay additional tax after the Spanish authorities revalued their properties. Was this ever reversed? Is the revaluing of property an ongoing practice where you can expect to receive a tax bill every few years? Thanks ! |
Re: Property Transfer Tax (I.T.P) - how calculated?
Originally Posted by In love with forests
(Post 12676662)
Sorry if this is a basic question. I can't find the answer by googling so thought I'd ask in here instead.
The above tax is paid by the buyer of a resale (or secondhand) property at a rate of around 8% of the property's value. Is this calculated on the price that is paid for the property, or some other valuation? I remember hearing some time ago about people being forced to pay additional tax after the Spanish authorities revalued their properties. Was this ever reversed? Is the revaluing of property an ongoing practice where you can expect to receive a tax bill every few years? Thanks ! |
Re: Property Transfer Tax (I.T.P) - how calculated?
Originally Posted by snikpoh
(Post 12676671)
ISTR it based on the sale value or the cadastral value - whichever is highest.
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Re: Property Transfer Tax (I.T.P) - how calculated?
Originally Posted by In love with forests
(Post 12676662)
Sorry if this is a basic question. I can't find the answer by googling so thought I'd ask in here instead.
The above tax is paid by the buyer of a resale (or secondhand) property at a rate of around 8% of the property's value. Is this calculated on the price that is paid for the property, or some other valuation? I remember hearing some time ago about people being forced to pay additional tax after the Spanish authorities revalued their properties. Was this ever reversed? Is the revaluing of property an ongoing practice where you can expect to receive a tax bill every few years? Thanks ! |
Re: Property Transfer Tax (I.T.P) - how calculated?
Originally Posted by Loafing Along
(Post 12677262)
The Spanish government introduced the dual concept - sales value or local government cadastral value ( local rateable value ) as a means of fighting the quite common practice of property purchase partially in cash and then declaring a lower value on Registry documentation to reduce the Transfer Tax burden ( and launder some money ) . Most local authorities automatically opt for the "higher tax valuation" for obvious reasons. We were caught by this several years ago as we bought well under market value on a home that the bank was about to foreclose on. About six months after the purchase we got an additional demand based on a much higher valuation .
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Re: Property Transfer Tax (I.T.P) - how calculated?
Originally Posted by snikpoh
(Post 12676671)
ISTR it based on the sale value or the cadastral value - whichever is highest. It is 10% in Comm. Valencia might be 8% where you are though.
In the past, the sale value of the property was usually well above this value as catastral values are not changed for many years. It was not a problem, in fact it was often to the benefit of the property owner in cases like IHT when the tax office would accept the, lower, official value for tax purposes. However when the property market collapsed, the situation often reversed, depending on where you live, and the ‘official” value started to exceed the sale value. There really is no reason why it should come as a surprise to the participants in the sale as all lawyers should know about this and advise the buyer that the sales price is less than the official value and that they should expect to pay extra tax. If they were made aware of this then they could easily have adjusted the sale price to cover the cost of the extra tax. |
Re: Property Transfer Tax (I.T.P) - how calculated?
Originally Posted by In love with forests
(Post 12677295)
Thanks for your reply. And sorry you went through that. Did they change the law after you'd bought your property? And then applied the extra tax retrospectively?
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Re: Property Transfer Tax (I.T.P) - how calculated?
To add to my previous post, this is an example of the information about the coefficients for the Andalucia region. The same info should be available for every region. https://www.juntadeandalucia.es/boja/2013/39/12 It can work to your advantage. In the case of our property the official value is about 20% of the real value. That would have been a huge benefit for IHT, but they have recently increased the tax free threshold to €1 million so IHT is no longer an issue. |
Re: Property Transfer Tax (I.T.P) - how calculated?
Originally Posted by Fred James
(Post 12677314)
To add to my previous post, this is an example of the information about the coefficients for the Andalucia region. The same info should be available for every region. https://www.juntadeandalucia.es/boja/2013/39/12 It can work to your advantage. In the case of our property the official value is about 20% of the real value. That would have been a huge benefit for IHT, but they have recently increased the tax free threshold to €1 million so IHT is no longer an issue. Is the catastral value of every house made available for public viewing? |
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