The moment has come; You just decided that you want to sell your house. But, what is its real value? How much should you sell it for on the market? Sometimes, the estimated market value and the administrative value may not be the same. This is an important factor to consider before proceeding with any operation.
Fiscal Value vs. Market Value
How does Tax Agency estimate the value of my property?
On the one hand, it is very important to know the tax value of our property, as it is beneficial when processing inheritances, donations, paying taxes, selling it, etc. The tax value acts as a minimum price for your home, which means, the minimum value for which you should notarize a property, and the price you will pay taxes on if you decide to buy or sell the property to avoid problems with the Treasury.
It must be said that calculating the market value or actual value of a property is very complicated and subjected to many variables, but, on the other hand, this prevents fraud in buying and selling operations and/or donations, since the value that the tax gives to your property is a fixed variable for them.
Let’s see an example, a family member wants to sell you their home for a very low price, which has nothing to do with the tax value. By selling it he/she would pay in rent for the equity gain, which makes the difference between the purchase price and the selling price. But on the other hand, you, as a buyer, will have to pay the Estate Transfer Tax (ITP). Now, the tax value comes into play, the value for which you bought is less than its tax value, so you will have to pay taxes on the value of the ITP, if this is not done Hacienda could make a parallel declaration for you to do so and potentially sanction you. All this must be taken into account for donations, where the minimum value of the house will be its tax value, inheritances, etc.
Is the cadastral value the same as the taxation value?
Although these are related figures, mixing them is a very common mistake. The cadastral value is the administrative value that the cadastre gives to your property and the second is the value of the house for the Treasury.
The cadastral value depends on each municipality. On it are calculated municipal taxes on the house, such as the Property Tax (IBI). Variables such as location, construction cost, soil value, construction value, etc. are taken to reach the cadastral value.
Previously we have explained how the tax value is calculated, which depends directly on the region and considers the cadastral value of the house, hence its relationship. This data can be found on the Treasury website.
And the price of the real estate market?
The housing market is volatile, during the 2008 crisis, many people had to sell at lower prices than they had bought and did not consider the tax value of the property. When selling it for a lower price on the market, they had to pay tax on the tax value, which was much higher than the sale value of the property, and this adversy affected them.
At Grupo Portal Menorca, we consider all these factors. To calculate the market value, we take into account the location, characteristics, condition of the property, and the added value of the surroundings. Although we offer a free online property valuation tool on our website, we recommend complementing this initial valuation with a detailed assessment conducted by our experienced agents.
Additional Factors to Consider for Your Property’s Valuation:
- Local Market Trends: Analyzing market trends in your area can provide a more accurate perspective on the current value of properties similar to yours.
- Economic Conditions: The general economic situation can influence real estate prices. Factors such as interest rates and access to credit are also important.
- Improvements and Renovations: Any improvements or renovations you have made to the property can increase its value. It is important to document and present these improvements during the evaluation.
- Comparison with Recent Sales: Comparing your property with recent sales of similar properties in your area can provide a solid reference for the selling price.
If you are thinking about putting your property up for sale but have doubts, here are some tips that may help you:
- 5 Documents You Need to Sell a Property.
- 10 Tips to Help You Sell Your House.
- What Expenses Are Involved in Selling a Property in Menorca.
But most importantly, remember that we are here to help you and guide you throughout the entire process. Do not hesitate to Contact us!