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I am buying a run down flat in a run down building for a genuine 50,000 euros from a deceased estate. My Lawyers advise me that the Cadasral Value in 150,000 so I will have to pay 10,000 tax on this. The price was reduced from 95,000 for a qick sale as it was on the market for 2 years. This is not a case of part payment under the table. I am doing everything "by the book.." The point is, what will I have to pay in Capital Gains Tax if I sell in say 10 years time-the difference of the actual 50,000 or the difference of the "Cadastral value" from the selling price. Can I get a revaluation by the tax authorities before I start renovations, or is the Cadastral value set in stone????
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here is the correct spelling- catastral.
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Daveil
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Below is a quote from the internet.
As it describes, the cadastral value is not the value ascribed to the sale of a property. I do not know where that comes from but I do know there is an official ‘list.’
The Cadastral Value is in effect the same as (what used to be) the rateable value in UK
When I have sold in the past (when declared values and actual sale price were not necessarily the same) I used to ask a friend, a notary, what price I should declare. Using my copia simple to ensure he knew what the property amounted to in square metres, and its precise location, he would consult the on-line list and give me a minimum value for declaration. I never had any problem with later increased tax claims.
QUOTE from:- http://www.dmproperties.com
The Cadastral Value is an administrative value which is used by the Authorities as a reference for fiscal purposes (such as IBI – ‘the rates’ Personal Income Tax, Wealth Tax…) and for other administrative purposes (such us expropriations, public subsidies, concessions…). Therefore, it will mainly affect any liquidation of taxes based on that value.
In Marbella, the last Cadastral valuation took place 23 years ago, although according to law the revision should have taken place every 10 years. The real estate market has changed tremendously during all those 23 years. Besides we have had a new Master Plan approved with important changes in the legal consideration of many properties.
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Hi Feeg, it's a good question. I sold my apartment in 2012 and made a big loss on it, However i had to pay 5% Capital Gains retention. My lawyer is still chasing this up a year later and now I'm thinking that i won't get all my 5% back.
I thought the simple calculation was Price of purchase - Price of sale = capital gain or loss, however if the Spanish tax office calulate Price of purchase - Current cadastral vallue I won't have made a loss - which is factually not true.
Does anyone know exactly how the caluclate the capital gain/loss?
Many thanks, Carl
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Does anyone know exactly how the calculate the capital gain/loss?
Well obviously in a normal market it is as you say the actual ‘Capital Gain’ the profit, on the property, what you paid against what you sold at. But there has always been the ‘official list’ (see my post) which would override a sale price which is shown as lower than that price. In todays, down the drain, market that ‘official price’ could easily be higher than the actual sale price.
The Valor Catastral has no bearing, see my earlier post.
That of course is not reasonable but it’s the way it is. ‘Viva España’
The retention is to ensure that sellers cannot run off without paying at least some of the tax, as they used to do.
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Thanks John, but in this case there was no capital gain so what am i to expect back?
I guess taking your logic that they would take the cadastral value at purchase and sale time? To take the official purchase price and offset that with some ficticious cadastral value would be even more unfair....
Now I've said that, I'm waiting for oyu to say that's exactly what they do actually do.
How have others fared, who have made a physical loss on a property and had to pay this retention? Did any of you get back a fair amount?
Carl
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Thanks to those replying. I do not have a problem with some fictitious catastral figure for the application of rates or IBI. My problem is why should I be hit with a 10,000 euro tax on the 50,000 buying price and this 150,000 catastral figure, and probably an equally crazy capital gains tax when selling. I could for example sell next year at say 70,000 (fat chance of that), and also pay a capital gains tax on 150,000 catastral less 70,000 (or even 50,000), giving a whopping +/- 100,000 "capital gain" and paying another +/- 20,000 gains tax?
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What’s this continuing to talk about catastral value? As I said, “The Valor Catastral has no bearing on Capital Gains Tax , see my earlier posts.”
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Thanks John, I appreciate your input. Can you tell me why I am in for this 10,000 euros tax based on the difference in the selling price (my buying price) and the catastral price?
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OK last attempt.
Feeg the catastral value, (which even now is far below the selling price of a property) has nothing whatsoever to do the the calculation of capital gains tax.
It is used when paying the Non residents property owners tax (form 210) and the town hall taxes (rates) IBI, basura etc.
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The catastral value is used by the Hacienda as the base for calculating the value for sales, capital gains and inheritance tax. However, as Johnzx states, a lot of these are out of date. As a result, each year, the autonomous communities publish a list of the multipliers that are used to calculate the value, which the Hacienda then use as the value for the items mentioned. The multipliers for each town vary, depending upon when the catastral value was last reviewed. There is a formula that they use ( i think, as Johnzx says, its similar to the UK rateable value, so includes, amongst other things, rental values , as far as I recall) which was punlished by the Hacienda, so they don't make it up.
The information is freely available if you know what to look for. Some AC's -e.g Valencia - have a website where you can select your town, and input your catastral value, and it works it out for you, but it is a very simple calculation. For example, in my town, the Catastral was revised last year, so the multiplier is currently 1.5 for transfer tax and 1.2 for IHT This message was last edited by Kathyslad on 24/10/2013.This message was last edited by Kathyslad on 24/10/2013.
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This might be useful:- http://www.justlanded.com/english/Spain/Spain-Guide/Property/Fees-Taxes.
However, using the catastral value to estimate the sales price would mean, for my property, mulitiplying it by at least 3
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I have a couple of links to some AC's, but I can't remember where you live, if I ever knew. If you let me know I'll post the link, although they'll probably be reissued in December (no doubt upward)
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Feeg, in answer to the question you asked at 17.45, it's called complementary tax, and I'm guessing that's covered in the link Johnzx has given. Otherwise just use the search box above for discussions/articles about it. This message was last edited by aly not in spain on 24/10/2013.
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Nigel
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Thanks Nigel, the info is very useful, and the reference to Estepona is where the property is. I quite understand that the Catastral Value is to base the annual rates on, but can anyone tell me WHAT this 10.000,00 Euros tax is, and WHY it has to be paid please??
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Nigel
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BTW Feeg, whilst I understand buying a run down flat, I hope you have thoroughly researched buying in a run down block.
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