Property ownership transfer: Did you pay more tax you should have?
To make this article as simple as possible we’ve created a fictional case.
Let’s imagine you buy resale property in Sunny Spain, somewhere in Alicante province.
Your property costs 80,000 Euros, which would have 10% transfer tax in the Region of Valencia. You pay the relevant amount of tax: 8,000 Euros. Everything clear, everything legal.
A short period of time after, you receive a letter from the tax office claiming €2,000 in extra tax on the purchase of your property.
Because the tax office uses a formula that’s not according to the actual market price of the property.
On their records, your property is calculated at 100,000 Euros. The relevant tax on that amount would be 10%, hence the 2000-Euro difference they are claiming (€10,000 tax according to their records minus €8,000 paid at purchase).
The good news
The court sentence 2186/2018 from the Spanish Supreme Court determined the way the tax office calculated the real value of the property is inappropriate.
The formula used by this entity does not correspond with the actual value of the property, as such formula is based on parameters from the time before the financial crisis, where properties were more expensive.
There are two possible scenarios:
- You already received the initiation of their own calculation of the value
- You have just received the second letter from the tax office with the invoice
In scenario number 1, do not appeal yet and wait for the letter with the invoice, as it is only a provisional liquidation of the revaluation.
In scenario number 2, you have 30 days to appeal against the definitive revaluation to a higher authority.
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