Spanish Property Tax | The Cadastral Value on a Property - What you should know before you buy
Anyone who either owns or is planning to buy property in Spain needs to know about the Catastral value of the property (or Cadastre to use the French term). Unlike the Land Registry, which records legal ownership and with which it is often confused, the Catastral is not a legal record of ownership, but is an estimate of the capital value of the property, which is used as a base figure for a number of property taxes. The easiest way to find the Catastral Value of a property is to check the amount listed on the IBI (local property tax) invoice or to visit the Catastral office in the town hall. However, note that the value should only be given to someone who can show a registered interest in the ownership of the property or their representative, which can make comparison with your neighbour’s difficult.
The value is drawn up by independent government employees using strict and complex valuation guidelines to ensure consistency. Initially, they depend upon a description of the property and its use, which is obtained by observation, licence applications and increasingly, studies of aerial photos. As the Catastral description lists the best estimates of the site’s registered boundaries, obtained from historical records, title deeds, agricultural plotsa, planning applications and any other source where change has been detected, it can be one of the more reliable sources of information and help to settle boundary disputes and the like. However, it is by no means infallible as it will not catch all extensions and changes, ranging from integral garages to bedrooms, structural problems, and the many other alterations that can be made to a property and that affect its value.
The gross external floor area is used, (Construido-Built) with allowance for open-sided covered areas being calculated at 50% and areas under 1.5m high being ignored. This can differ substantially from the “Util-Usable” or net internal floor area, which is an internal measurement, used in construction and excludes external walls and certain other items.
Since the details used in the “Nota Simple” and the Catastral are obtained in different ways, it is not unusual for variations between these property descriptions to occur. The most frequent problem found here is that the Land Registry is compiled at the point of construction and it is a legal nicety that the sizes recorded are given by ‘declaration’ and are not guaranteed or checked by the Registrar or Notary or other independent body. Also, changes to the property thereafter are often not noted, which can also affect the Catastral records where there can also be discrepancies due to human error or failure to update information.
After the size and nature of the property are determined, a rate per square metre is applied to it. This rate is an estimate of the sale value of the property, calculated from actual registered sales and other property information. Naturally, this information has to be reviewed every few years in order to keep the comparative values of neighbouring properties relatively accurate. This is done on a municipality by municipality basis, so that all neighbouring properties are valued in a similar way. Unfortunately, this can mean that values of a few years ago can become the basis for a Catastral value that may not bear any real relationship to the current value of the land and property.
However, the main concern should not be the individual Catastral value, but its relationship to those of its neighbours. This is where consistency is essential so that everybody is treated in the same way. Equally, the level of value is really of little importance as it is the multiplier that is applied, by politicians and tax authorities, that decides how much actual monetary value it has. The Catastral value is used for calculating capital gain on a property when it is sold and also for the amount of IBI or local property tax that an owner has to pay each year.
It is possible to appeal the Catastral value of a property, but only at the time of revaluation. The timescale is short and the methodology is complex, so that unless there are gross errors it can often just add more expense without an effective result.
When purchasing a property it is important to have sight of both the Land Registry and the Catastral records to ensure that any errors are noted and corrected. If this is not done, it can be that the buyer will be responsible for obtaining licenses and/or paying fines for unauthorised works or even for changing the property back to its former legal state. Differences in these records to the actual building are often a means of identifying potential problems of ownership and/or legality. With this knowledge the potential buyer can then instruct his or her lawyer to ensure that corrections are made prior to purchase and at the cost of the seller.