If you bought a second-hand house at a very good price, you may have to pay more property transfer tax (ITP). And how ? Indeed, he checks the value of the property purchased and if he considers that it is worth more than what you paid, you will have to pay more taxes. But all is not lost: you can stand up to the tax agency and avoid paying more.
That the regional treasury demands from the buyer of a cheap house or from the heir of a house a higher payment than that initially paid by transfer duties (ITP) or inheritance and gift duties (ISD ) is something that is already recurring. The reason for this is that they value homes above the deed price.
This claim for the “additional tax” is known as “additional liquidation for verification of values” and is also accompanied by the corresponding default interest. The corresponding regional treasury opens a claim when it determines that the value of a sold or inherited house is higher than the price at which it was sold, according to the values processed by the regional administrations. This shows that there is a big difference between the market price and the value established by the administration.
And how do the autonomous regions determine the value of a house? Article 57 of the General Tax Law establishes seven different methods for verifying values. Thus, through this verification, the regional treasuries examine the assessment that the taxpayer made of a property at the time of the taxation of its acquisition, both in the context of the tax on transfers (ITP) than in that of inheritance and gift tax (ISD).
José María Salcedo is a partner in the law firm Ático Jurídico, one of the most active when it comes to dealing with the voracity of the Public Treasury. This expert recommends five tips for successfully challenging the Treasury:
1. how to object to the tax agency.
The buyer of a second home can appeal the tax settlement or promote a contradictory expertise (TPC). Salcedo recommends the first option, that of bringing an appeal against any verification of the values, since the majority of liquidations that are the subject of an appeal are canceled by the courts (whether economic-administrative or judicial).
With the appeal, the taxpayer obtains the cancellation of the liquidation and, therefore, of the valuation made by the corresponding Autonomous Community, since he considers that it does not correspond to the real value of the house.
As for the result, with the appeal, if it is upheld, the taxpayer does not have to pay any additional tax to that paid at the time by the ITP or inheritance and gift tax). But with the contradictory expertise, normally the taxpayer will obtain a debt reduction requested by the administration.
To appeal against the liquidation, an economic-administrative claim against the liquidation must be filed, which will be resolved by the corresponding Regional Economic-Administrative Court (TEAR). The deadline for filing this appeal is one month.
If TEAR rejects the request, a contentious-administrative appeal must be lodged with the Superior Court of Justice (TSJ) of the Autonomous Community. In this appeal, the taxpayer can provide as evidence an expert’s report, in order to prove that the administrative assessment does not reflect the real value of the property.
2. the tax debt does not have to be paid.
The lawyer recalls that during the appeal, the taxpayer must not pay the additional taxes claimed by the Treasury. And it is not necessary to provide guarantees, how? By reserving the right to promote contradictory expertise (TPC). Article 135.1 of the general law on taxes (LGT) provides that the buyer of a dwelling can also “reserve” the right to request the contradictory expertise. That is to say to appeal the liquidation, but reserve the right to request the expertise in the future.
3) Is it possible to cancel a value assessment?
Yes, indeed, the Supreme Court has just declared compulsory the visit of the expert in the verification of the values, that is to say in the checks that the autonomous treasuries make to know if the purchase price of a property or which has been inherited complies with the assessments they process and thus pay the corresponding taxes (ITP and inheritance tax) and not less. And this requirement is almost never met by the tax agency…it is rare for the expert to visit a purchased or inherited home.
In an important judgment of January 21, the Supreme Court ratified the mandatory nature of this visit, whereas for many years the administration has required the surveyor to go on site to check the characteristics of the property: age, state of conservation, qualities and materials used.
In addition, the courts are gradually canceling one of the methods used by the various autonomous regions to verify the value of the property and which, until now, has been more difficult to combat, namely the “mortgage valuation”.
4. What happens if the Public Treasury carries out a new assessment of the tax when it has been cancelled?
The Regional Economic-Administrative Court (TEAR) usually cancels these “second” value checks for lack of motivation and orders the retroaction of the actions, that is, not having to pay the ITP or the tax again on estates if you inherit a house.
But for the Treasury to be able to notify the new regulations again, it must do so within six months of receiving the Court’s decision. And if she doesn’t, the file expires and the prescription will not have been interrupted.
As we said, it is usual for the liquidation to be canceled again due to lack of motivation. After that, the Tax Administration can no longer initiate a new verification of values, that is, it cannot issue a third liquidation, as declared by the Supreme Court on June 29, 2009.
5. Checking values also affects the seller
José María Salcedo assures that it is common for the Tax Agency to try to charge the IRPF (personal income tax) to the seller of the house because it considers that its capital gain has been greater, according to the verification of the values made to the buyer. This possibility will be expressly regulated in the new law against fraud, which is still awaiting approval. This law provides for the notification of the value verification to the seller so that he can appeal, because so far the seller has no way of knowing the value verification report.
For example, a taxpayer sells an apartment for 100,000 euros and declares in his IRPF the corresponding capital gain (due to the difference between the purchase value and the sale value). And at the same time, the buyer receives verification of the values that the seller does not know. The regional administration on duty estimates that the property is not worth 100,000 euros, but 180,000 euros. And sets the ITP corresponding to the buyer.
The Regional Economic-Administrative Court (TEAR) of Castilla y León ruled in favor of a taxpayer (in a lawsuit won by Ático Jurídico): it understands that the seller was without defense, having imposed an assessment made on a different taxpayer ( the buyer). And all this without even giving him the opportunity to review the assessment so that he can challenge it.