The reference value of a property: What is it and what is it for?

The reference value is not necessarily equivalent to the market price as it is based on a standard calculation.

The market value of a property is the price at which a property could be sold on the market under normal conditions, that is, without urgent external pressures or atypical circumstances. This value reflects what a reasonable buyer would be willing to pay and what a reasonable seller would accept. It considers current supply and demand, the specific characteristics of the property, its location, its state of preservation, and the general economic conditions​…

The market value is based on real transactions and expectations of the real estate market. It can vary considerably depending on external factors such as the economic situation, changes in urban planning regulations, improvements in nearby infrastructure, and other elements that affect the perception and demand for the property in question​.

Let us remember that the reference value of a property aims to prevent lower tax collection in these transactions where the sale price would not be in line with the market price.

In this regard, both the real value and the reference value must be considered to determine the basis for tax calculation.

When the sale price (or declared value) is higher than the reference value, the taxable base of the tax will be this sale price or declared value.

Conversely, if the sale price is lower than the reference value, the taxable base of the tax will be the reference value.

Occasionally, the reference value does not correspond to the real value of a property, being higher than the real value. In such cases, if carrying out any taxable act, such as a sale or inheritance, it will be necessary to pay the tax based on the reference value, even if it is above the real value, since otherwise the Tax Agency's computer system currently does not allow declaring a value for tax purposes below the reference value.

In such cases, there are two possibilities. The first is to go to the Land Registry before carrying out the transaction, requesting that the reference value be corrected, for which it will be necessary to present evidence justifying the reduction of the reference value, such as an appraisal or a report from an architect.

The second possibility is to initially pay the tax based on the reference value and then claim a refund from the Tax Agency for the amount overpaid, since the law states that taxes must be paid based on the real value. Thus, in this case, it will be necessary to make a tax claim to the Tax Agency in a different procedure from the tax payment, and it will be necessary to present evidence proving the real value that differs from the reference value.