Perhaps you are one of those who at this time of year are thinking about how to save on your income tax return. Or maybe you are thinking about buying or selling a property. In both cases, you will have seen a concept that you may not know about or that you only know exists, but that you do not master. We are talking about the cadastral value of a property. What is it? How is it calculated? Where can you find it? Many questions to which we try to give you all the answers.
What is the cadastral value of a property?
Let's start with the basics: defining what the cadastral value of a property is. It is an administrative value determined objectively for all properties registered in the real estate cadastre. In turn, this index is made up, according to article 22 of the revised text of the Law on Real Estate Cadastre, of the cadastral value of the constructions of the dwelling and the value of the land.
To put it more simply, the cadastral value is a price that is established for any property based on the registered value of the land and its buildings. Although, if you are going to sell or buy a property and you are looking at its price, the cadastral value is important, but you should know that it is not definitive. The reason is that it does not include many other factors that will increase or decrease the final price of a property. Therefore, there are differences between the cadastral value and the market value.
However, it is useful as a reference or, for example, when it comes to tax deductions, whether we are landlords or tenants of a property. For example, if you want to deduct taxes because you pay rent for a flat, depending on your income, the cadastral value will influence the amount of the deduction.
How to calculate the cadastral value of a property?
But how do you calculate the cadastral value of a property? You cannot do it yourself. The reason is that the cadastral value is established by the Cadastre based on the aforementioned cadastral values of buildings and land. In this line, you should know that the criteria for valuing land are:
- The depth of the plot in question and its surface area.
- The facades of the property and their length.
- Whether or not this land can be built on in the future due to official protection regulations in the area where it is located.
For their part, when assessing the constructions, they will rely on:
- The use of the property and its condition.
- Whether or not it has been reformed and how much time has passed since then.
- The age of the dwelling.
These criteria will be key in the valuation, an operation that will be carried out by the Cadastre. For this reason, the Cadastre is a very useful source of information to find the cadastral value of a property. It offers very extensive and official records, although not always representative, of the market or final value of a property.
What happens if I buy a property for less than its cadastral value?
Nothing, since, for legal purposes, it is possible to buy and sell a property between two individuals for a price lower than the cadastral value of the property. Obviously, however, both parties must agree to such a transaction and will have to justify it to the tax authorities.
How to know the cadastral value of a home
Although the Cadastre is in charge of establishing a cadastral value for a property, you, as the owner of the property, will be able to know it. In fact, you will need to do so for certain financial transactions. Owners can find out the cadastral value of a property in three ways:
- By consulting the electronic site of the Cadastre.
- By means of the IBI (Real Estate Tax) receipt, as each local council, when claiming this payment annually, will provide the cadastral value on the receipt.
- Contacting the Cadastre by telephone or in person at the offices of your local council.
If you are the tenant of a property, you will not be able to know the value, but you will be able to know the cadastral reference (alphanumeric indicator that will appear in the rental contract). The numbers and letters that compose it are digits that refer to the property itself with information such as location, territorial management or the specific flat. You will need it to take advantage of deductions for renting property in certain regions.
What is the cadastral value for?
We said that the cadastral value serves to get an approximate idea of how much a property costs. In most cases, it will not be equal to the market value at which a property has been appraised. However, it can give you an approximate idea of what it might cost. Not only that, but the cadastral value is also used to determine the cost of certain taxes. These vary annually depending on various fluctuations and are updated in the General State Budget Law. That is why the amount to be paid changes every year.
The most common tax that we all face is the IRPF (Impuesto sobre la Renta de las Personas Físicas). However, if you own a property, its cadastral value will vary due to the following taxes, which you will also have to pay:
- IP (Wealth Tax)
- Plusvalía municipal (Municipal Tax on the Increase in the Value of Urban Land)
If, in addition, you have bought a house or property, you will also find yourself with:
- The ITPJD (Tax on Transfer of Property and Documented Legal Acts)
And if you have inherited it, you will add it to the previous ones:
- Inheritance and Gift Tax (ISD )
A lot of expense and a complex financial term? Even more so if the cadastral value of a property or the different taxes are financial concepts that you do not master. In this case, the best thing to do is to use the services of specialised companies or expert mortgage or financial advisors. Buying a property with a mortgage, renting it as lessor or lessee, facing your fiscal and tax obligations as owner... In all of them, the cadastral value of the property is one more player in the game, but not the only one. Therefore, and in short, we recommend that you let yourself be guided and advised. Your economy, in the long term, will thank you for it.