Do you own property in Marbella? Have you checked your mail lately?

If you do own property in Marbella, you can be sure you have a certified letter on the way from the Spanish Tax Office. Why? Because your property values have been revised and the tax authorities very kindly just want to let you know.

What if you don’t agree with the new value assigned to your property? Then you have only one month to file a complaint. This must be filed with either the national Tax Office (Agencia Tributaria) or the regional Economic-Administrative Court (Tribunal Económico-administrativo de Andalucia).

Property values haven’t been updated in Marbella since 1988, and so many things have changed in 23 years. For one thing there is a noticeable difference between market values for properties and the value used to calculate property taxes. What’s more, the Marbella Town Hall finally passed the new property zoning laws in 2010. This also affects the value of many properties throughout the municipality. The revision however – even if justified – comes at a difficult time when most people are tightening their belts and trying to make it from month to month.

The property tax rate is used to calculate a number of taxes such as the Rates (IBI), the Income Tax relating to the ownership of real estate property not used for commercial or professional purposes or as home, the Non Resident Income Tax, the Plusvalia Tax. It furthermore serves to check the value of real estate for death duty, gift tax and transfer tax.

Lawyer Rafael Berdaguer is specialised in Spanish property law. He has personally checked the calculations of some of the new tax rates and found errors. According to Berdaguer, “Sometimes we discover a mistake in the size of a plot or that properties have been included that don’t actually belong to the owner. Another possible error is to calculate the value of one owner’s property by including common areas that the entire community is using.

Another important error involves overvaluing a property by as much as 50% more than the market value!” Berdaguer expects this last type of error to affect a large number of property owners due to the way the current financial crisis is affecting property values. All of these are good reasons to file a complaint in order to correct the government’s assigned rate.

What if you are in dire financial straits? Can you just do nothing when the notification arrives in the next few days? As a responsible citizen you need to stand up for your property and make sure that the value of your land has been properly calculated.

The truth is that these notifications are difficult to understand. Written in pure legalese, these are heavyweight documents full of technical references, coefficients and data that require specialized legal expertise to understand. However, there are experienced professionals who can revise property values for a fee that is very small compared to all the money an owner can save by detecting errors. Not only do owners save in direct property taxes, but also on all the other taxes mentioned – because all of them are based on property values!

How much are property values set to increase?

In some cases property values will rise by up to five times! Some property owners naively think they can protest at the town hall when their taxes come due. Nothing could be further from the truth. This tax is regulated by the national government and the only way to contest new property values is at the proper agencies and within one month of receiving notification.

Other property owners will ask for a reduction of local property tax rates – and this might help – but only for one tax. The key is to be sure the property value itself has been impeccably calculated so that all the taxes that depend on it will be fairly figured. Once again, there is just one month to file complaints, and then everything is set in stone.

This is why Spanish lawyers like Rafael Berdaguer, recommend taxpayers take action.

“Don’t waste your time complaining and doing nothing,” he says. “This will just have negative financial consequences in the long term – and you will have to live with this for years to come.” What is his recommendation? “Get a professional to go over every fact and figure with a fine tooth comb. Maybe they will find that everything is in order. Maybe they won’t. If there is an error, you can get it fixed and save yourself money in the future. If everything is okay, at least your conscience will rest easy knowing you did everything you could.”