How much is my property really worth?

This is a question most owners of property in Ibiza and the Balearic Islands would like to have answered.

Unfortunately the answer is not so easy to find. In the case of a sale or inheritance of a property, the valuation of the property is of vital importance, because the value of the property as stated in the notary deed is the basis for the calculation of both land transfer taxes and inheritance taxes.

There are several starting points for determining the value of a property: One reference point is the purchase price declared in the notary deed at that time. However, this is often no longer current.
A glance at the current property tax document of the property provides information about the cadastral value. Within the framework of the taxation of real estate with the real estate tax (so-called “IBI”), the municipal administrations evaluate each property located in their municipal territory with the so-called “Valor catastral”, the cadastral value. This value serves as the basis for calculating the real estate tax, for determining the “true value” in the case of inheritances and for calculating the municipal plusvalia tax (“Gemeindliche Wertzuwachssteuer”). This means that the cadastral values must be constantly updated by the municipalities. Currently, the cadastral value is adjusted to the market value in all municipalities at different speeds. Unfortunately, the Balearic Islands do not have the same system of calculation as Catalonia, where the administration has tables of land values based on the cadastral value on the one hand and on a coefficient worked out for each town on the other. These tables are used for the calculation of the land transfer tax, for the sale of land and for inheritance tax, so that the taxpayer can obtain accurate information on the valuation of his property from the authorities.

What guidelines does the Balearic Tax Authority give to taxpayers to enable them to calculate a value that will subsequently remain unobjected?
The tax authority provides a methodology on its website that can be used as an indicative calculation basis:
http://www.atib.es/TA/valoraciones/inmuebles.aspx
On the mentioned website you can enter the key data of the property to be valued: The cadastral value, the age, the location and the square footage of the property. At the end of the process you will receive a valuation of the property.

However, this calculation is not binding for the tax authorities and is only a way to arrive at a valuation that approximates the “true” value of the property. The taxpayer still has the option of having the current value of the property determined by an expert opinion. Such appraisals are prepared on the basis of comparison parameters: For comparison purposes, sales prices in similar locations and of properties of similar size and quality are used.

In summary, it can be said that the value determined by the taxpayer for the notarial deed can be checked by the tax authorities at any time. The tax authorities have the right to review at any time and can make their own assessment and therefore always have the last word. In practice, the taxpayer is left with two methods of valuation: firstly, the calculation of the value based on the website of the Balearic Islands Tax Authorities, and secondly, the commissioning of an external valuation report.