When you purchase a second-hand property, you need to pay the Tax on property transfer and documented legal transactions, as taxable asset transfer. The tax rate is established differently by each region in Spain.
First, we need to pay tax based on the property purchase value. Be careful with this, as a procedure of value verification may be started. What is a value verification? Basically it means that the Tax Administration assesses real estate values from time to time based on a few tables, in such a way that we should respect the so-called tax value in order to avoid future problems.
The value tax may be obtained at the regional department of Economy and Tax Agency in the city where the property is located, or accessed online at the official site of the regional department of Economy and Tax Agency of the said city. We recommend you go personally, since sometimes the values on their website are not updated.
Therefore, before purchasing a second-hand property, it is advisable to check the tax value registered in the Tax Agency before closing the transaction. If the tax value is lower or equals the purchase price there is no problem, but if the tax value is higher than the purchase price then we may face a potential verification of values.
Facing temporary liquidation
The verification of values entails that the Administration issue a proposal for temporary liquidation, whereby it makes you pay the difference between the amount set by you and that set by them, using as a basis the tax value assigned by them and the interest on arrears. Therefore, when receiving a notification, do get in touch with a professional immediately so that they assess and study the said notification and prepare the line of argument to be used in the phase of arguments.
Once submitted the arguments, which often takes between 10 and 15 business days, they can either approve them and terminate the procedure, or dismiss them and notify you of the so-called temporary liquidation, following which you may pursue three different procedures that may not be simultaneous, as follows
1. To start a contradictory expert appraisal, whereby you provide an appraisal performed by an independent expert whose fees are paid by you, in order to argue that the asset value is lower than the one assigned by the Administration.
The delay of the procedure depends on the asset value assigned by your expert, and in some cases a third independent expert appraisal may be required, if certain requirements are met.
2. An appeal of reconsideration, studying what argumentative line is to be followed, for example that the reasoning in the liquidation is not correct or that the value obtained is not sufficiently reasoned, that the valuation is signed by a technician of the Tax Agency instead of an architect… Every case will be different.
Then, it may be approved or dismissed, in which case you would need to decide whether or not to continue with the procedure.
3. Filing an administrative economic claim, whereby the matter will be decided by the relevant Economic Administrative Regional Court, whose resolution will put an end to the administrative procedure.
The argumentative line to be used is similar to the appeal for reconsideration. Many taxpayers choose to skip the procedure of filing this appeal and proceed directly to the Administrative Economic Regional Court to speed up the procedure. The reason behind this is that if your reasoning was dismissed it is likely that the appeal be dismissed too. However, we insist that each case needs to be assessed separately.
When buying a property, the buyer needs to make sure that the purchase price is fair.
For this reason, when receiving such a notification it is advisable to assess the property in particular and study its condition at the time of purchase and whether the purchase price was according to its real value. Then, assess the procedure and your options, since there are times where it is recommended to pay, especially if there is no grounded base for appeal.