How is the purchase of a house taxed, by its cadastral value or by its reference value?
Since 1 January 2022, all property purchase transactions must be taxed at the reference value of the Cadastre, which is the new taxable base for Transfer Tax (ITP). It is important not to confuse this new value with the cadastral value.
The cadastral value is the objective valuation of a property based on data such as its location, the square metres of construction or the metres of land. For its calculation, the cadastral value of the land and the construction value are taken into account. This value is usually revised annually depending on the evolution of the area and prices.
Before the entry into force of the new reference value of the Cadastre, the different autonomous communities could use the cadastral value and the age of the property purchased to establish a reference value and charge ITP or Inheritance and Gift Tax (ISyD).
But nowadays the new cadastral reference value has come into play. How is it determined? It is determined by the General Directorate of Cadastre and is based on the calculation of prices of real estate transactions that are made before a notary and depending on the cadastral characteristics of each property. This value will be determined year by year, simultaneously, in all municipalities.
The cadastral value, on the other hand, is calculated on the basis of the value of the corresponding municipality and usually takes into account the location of the property, the location within the city, age, quality of construction, reforms or renovations to the building, or the state of conservation. This value is updated by the Budget Law, although not simultaneously or uniformly for all municipalities.
In both cases, the values are objective, i.e. both the reference value and the cadastral value will value two dwellings on the same floor of a building, with the same surface area, in the same way, even if one of them is renovated and with the highest qualities and the other is not. That is to say, these two values do not take into account the specific circumstances of each property.
How is this possible? Because the Administration is not obliged to visit the purchased property, so the real state of conservation, if it has been refurbished, materials used, etc. are not known.