Have you received a letter from the local tax office asking for extra tax, because they have reviewed the declared value on your purchase escritura?

You may not be aware but by law the Spanish local tax authorities (Oficina Liquidadora) are able to review the transfer tax paid on a purchase.

They can request that you as a buyer have to pay a Complementary Tax Liquidation if they understand that the declared value on the title deed is lower than that they would consider as the minimum acceptable market value.

This liquidation can be appealed by means of a (Recurso de Reposicion) Reposition Appeal or by means of a Economic-Administrative Claim (Reclamacion Economico- Administrativa) within one month.

On the 1st of October 2013, the Contentious-Administrative Section of the High Court of the Valencian Community ( TSJ) gave an important ruling relating to this.

It says that that the method used by the Oficina Liquidadora to review and re-evaluate the prices and values declared on the notarial “escrituras” and deeds of purchases, donations and inheritances, is not adequate due to it being based on the values and information from catastro.

The TSJ states that these values could be used as guidance, but the tax authorities should do an individual valuation, meaning the inspectors must visit or check the properties in person one by one. It is very important to prevent any possible problems with the authorities, therefore before signing any escritura or deed of purchase, donation or inheritance, the value should be checked and verified that it is being declared over the minimum tax acceptable value by the tax authorities.

If it is not, it is important to keep evidence that justifies the lower value declared, i.e. photographs of the property if it is in bad conditions and needs renovation, keep invoices of any renovations carried out, purchase contracts, mortgage agreements, transfer of funds etc.  You can also arrange a private survey that can specify the value and state of the property at the time of purchase.

If you receive a letter from your local Oficina Liquidadora reviewing the transfer tax that has been paid, advising that they wish to review the value you declared on your purchase, donation or inheritance, as they believe the real market value to be higher, please contact our office now for assistance.

CostaMedConsulting is a service company for clients requiring help and advice with matters relating to the ownership of a property in Spain.

We cover the areas of Costa Blanca and Costa Calida, from Alicante in the North down to Mazarron in the South including the inland areas, forming a triangle (areas like Roda Golf, La Tercia, San Javier, Rojales, Quesada, Los Montesinos, Guardamar del Segura etc.) in this beautiful part of Spain.

Our office is manned mainly with English speaking staff but we also have staff attending our large clientele within the Scandinavian countries. We have many years of experience of living in Spain and the “jungle” of bureaucratic matters, which the ownership of a Spanish property entails.