The big cadastral adjustment: the new reference value of the cadastre

The reference value of a property is the value determined by the Dirección General del Catastro based on the analysis of the average price of all property sales carried out before a Notary or registered in the Property Registry, depending on the data for each property recorded in the cadastre. Furthermore, this reference value cannot exceed the market value, for which a reduction coefficient set by order of the Ministry of Finance will be applied.

The taxes directly affected will be:

1. Inheritance and Gift Tax (ISD).
2. Wealth Tax (IP).
3. Tax on Property Transfers and Documented Legal Acts (ITPAJD).

There are also other taxes that will be indirectly affected by the new reference value, such as the transfer of securities subject to the Securities Market Law, as the method of calculating the asset is affected.

Regarding the IBI, this will not be affected since the reference value does not affect the current cadastral value, the latter being the basis for this tax.

The reference value will be determined each year by applying the average value modules which, as we have already mentioned, are based on the average prices of all property sales carried out before a notary or registered in the Property Registry, obtained within the framework of the annual real estate market reports prepared by the Directorate General of the Cadastre.

These average value modules will be published annually, in the form of value maps, on the Electronic Headquarters of the Cadastre (www.sedecatastro.gob.es). However, these modules will be assigned to territorial areas called homogeneous territorial valuation scopes.

To proceed with the individual calculation of the reference value of each property, based on the corresponding average value modules, through coefficients and calculation rules, this will be detailed in annual resolutions of the Directorate General of the Cadastre, which will also be published on the Electronic Headquarters of the Cadastre.

In any case, in order to ensure that the reference values do not exceed market values, reduction factors determined by Ministerial Order will be applied. As of today, the reduction value is 0.9, both for movable and immovable property (Order HFP/1104/2021, of 7 October).

In summary, it is carried out according to the following steps:

1. The annual report is prepared, which collects the conclusions of the analysis of the prices of the sales carried out.
2. Preparation of the value map, which defines the homogeneous territorial valuation scope to which the average value modules are assigned.
3. Resolution to set the values, contains the necessary elements for the determination of the individualised reference values, whose proposal will be submitted to a collective hearing process.
4. Individualisation of the average value modules based on Cadastre data: can be consulted on the Electronic Headquarters of the Cadastre from 1 January 2022, having been published earlier in the BOE in these last days of the year.
5. The reduction value is applied, as already mentioned.

1.- Before Law 11/2021

The jurisprudence of the Supreme Court has considered (for example in STS 843/2018, of 23 May 2018) that the verification method consisting of estimation by reference to cadastral values, multiplied by indices or coefficients, as set out in Law 58/2003, of 17 December, General Tax Law, is not suitable, due to its generality and lack of relation to the specific asset whose estimation is at issue; therefore, it requires that value verifications be sufficiently reasoned and individualised, rejecting generic criteria. Furthermore, the Supreme Court has determined that transfers below the minimum fiscal value, calculated based on coefficients, may be subject to verification by the tax administration, which must be carried out through expert reports, on which the Supreme Court requires an "in situ" verification, with a visit to the property in question, a requirement demanded in various rulings, including 5306/2015, of 26 November 2015.

2.- With the new reference value of the property

The new regulation will not prevent possible discrepancies between the value set by the administration and the real value, when the latter is lower than the former, and, obviously, that value may be challenged. However, the reform breaks with the aforementioned Supreme Court jurisprudence regarding verification by the administration. Therefore, this reform establishes a presumption iuris tantum (that is, it admits evidence to the contrary) that the reference value set by the administration coincides with the real value and, consequently, if the taxpayer considers that the property has a real value lower than that, it is the taxpayer who must prove it, or in other words, the burden of proof that they are not defrauding the Treasury lies with the taxpayer.

In the event of a discrepancy, it is possible to challenge the reference value, either by requesting the correction of the self-assessment, when the taxpayer submits a self-assessment applying the reference value and requests its correction for not being in accordance with reality, or by appealing the assessment issued by the Tax Administration, either due to lack of self-assessment or for having declared a value lower than the official one. These appeals shall be filed with the Tax Administration applying the reference value, which must request a report and forward the documentation provided to the Cadastral Management. This will issue a binding report for the Tax Administration, which will decide based on it whether or not the correction of the value is appropriate.

From the taxpayer's point of view, two important things must be taken into account:

1. They can challenge the valuation by any means of evidence admitted by law, mainly expert appraisals.
2. The cadastral holder retains the right to initiate any of the cadastral procedures to correct the cadastral description of the properties that may affect the Reference Value at any time.