MOF Checks On 3 Million Homes With View to Property Tax Hikes

4/11/2014 – El Mundo

The Spanish Cadastre workers have sent out letters to detached home and flat owners from over 1.000 municipalities. The notices inform about a lawsuit upon lack of reporting about property enlargement fined with €60. By 2016, more than three million homes will receive the notice letter.

The regulation came into force on the extraordinary basis in 2013 but will be extended until 2016 in order to draw a reliable picture of properties in Spain. The prolongation will also mean increased collection for city halls as the law allows to put a fine if the size of the property is greater than written on the Property Tax bill.

Therefore, the real tax, the only contribution which has risen exponentially during the recession, would steer upwards. Local authorities are the only public administration units that register a surplus boosted by this tax.

Moreover, the municipalities may demand payment of the proportioned part underlying the new cadastral value from the last four years, let alone the interest on the late payment.

This amendment also modifies the Personal Tax imputation for non-main homes as the taxpayers currently pay between 1% and 2.1% and that is to go up. Also, in case of sale, the tax on capital gains linked to the cadastral value would be hiked.

Specifically, thanks to the bird’s eye imagery, the arm of the Ministry of Finance may now prove any unreported change in properties, involving the most common renovations, known to the city halls as they themselves issued building permits for them, or unknown as the home owners aimed at dodging the tax. As an example may serve a house built on a non-urban piece of land.

In large majority of cases, the authority discovers swimming pools, storage rooms, booths, covered balconies and terraces, extension of the house by taking more square meters from the garden, or garages constructed on the parcel. Terraces on the rooftops converted into dwellings complete the list. The Law of Real Estate Cadastre states that any change must be reported within two months’ term after completion. Then, the city hall would increase the cadastral value of the property, as well as the taxation.

This is the perfect scenario. However, often alternations have not been reported or the Cadastre made a mistake taking amendments included in the original plan as enlargement. What makes things worse, contruction sketches from the 80s were frequently done through agents and firms that took the measurments at a guess.

The massive checking which will roll out throught the entire country (excluding the Basque Country and Navarre) started in 2013 by scrutinizing 176 municipalities. In 2014, the investigation embraced one thousand towns more and affected 1.5 million homeowners. In 2o15, another 1.5 million notice letters are expected to be sent.

Firstly, the regulation executors aimed at towns having large urbanizations and multiple detached and semi-detached homes (the best visible and easy to detect), for example Oropesa (Castellon), Fuengirola and Benalmadena (Malaga), or Benidorm, Calpe or Denia (Alicante).

However, it has not been done yet in large cities which gather the population and the ask for the notices. Only house areas in Alicante, Salamanca or Murcia are being checked. Possibly, the helicopters will fly over Madrid or Barcelona next year or even in 2016.

Although the income of the public administration the tax will bring in is unknown, it must be significant as the management and processing costs of the checking amount to more than €124 million.

In opinion of real estate experts, in spite of the Cadastre’s mandate to impose the law, the process ‘exclusively aims at tax collection’. They point out the investigation could have been done in a way that the owners of the areas would not be retrospectively punished and the city halls would be obliged to lower their rates on the real property tax to lighten the burden of the taxpayers.


Original article: El Mundo (by Francisco Núñez)

Translation: AURA REE