ATIB announces changes to property valuation methods in value verification procedures

Illeslex Abogados - specialists in real estate and urban planning

The Tax Administration of the Balearic Islands (ATIB), as part of its tax administration function, is responsible for implementing measures aimed at verifying the proper liquidation of inheritance and transfer taxes by the Administrator in the Balearic Islands in the case of live or dead assets.

These are taxes whose basis of assessment is the real market value of the property, which may or may not be the same as the value stated in the public deed.

To determine the real market value of a property, a value that, as we have seen, should serve as the basis for the corresponding taxes, the ATB traditionally distinguishes, based on the idea that the value of a property is the sum of the value of the property Building and the value of the property between the two, as it considers that the actual value of the building should be determined according to the scales set by the Architects' Chamber, while the actual value of the property was the result of doubling the cadastral value.

And it was precisely in determining the real value of the land that the problems arose because in many cases the criterion used by the administration to calculate the assumed real value of land (cadastre x 2) led to an overvaluation of the land and forced the taxpayers more pay as it suited him.

The land valuation method used by the ATIB for at least 15 years has recently been made difficult by three important decisions of the Supreme Court, the Central Administrative Court and the Regional Administrative Court of the Balearic Islands, which produce the same result Setback suffered:

The method of assessing land based on cadastral values multiplied by indices and coefficients is not appropriate because of their antiquity and lack of relationship with the real estate concerned, and alternative methods should be used to ensure that the assessment carried out by the administration does not fictitious and corresponds to the real market value of the property.

According to Diario de Mallorca, representatives of the ATIB met with the Bar Association of the Autonomous Community on 10 January to examine the existing situation in the light of the suggested solutions and to create the basis for future control values.

Therefore, there is no legal remedy available to the administration other than to recognize their misconduct and to declare that it will not object to the decisions taken in favor of the taxpayer.

However, the ATIB, confirmed by the Director-General, does not abandon the soil assessment method of doubling the cadastral value, but proposes that it be supplemented, without further clarification, by other verification methods that are adapted to the reality To ensure the rating of the property.

It remains to be seen how the ATIB will in future behave in the context of value verification procedures and whether future valuations of assets will reflect reality or, conversely, the valuation continues to be abstract without taking into account the real state of the property in question and thus ignoring its specificities that will obviously affect their assessment.