Tax value VS market value — How much is my house worth?
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.
How does Hacienda 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.
In Grupo Portal Menorca, we take all this into consideration, although to calculate the value of the market we must also take into account other types of variables such as location, characteristics of the property, the state of it, the added value of the surroundings, etc; and this know-how is acquired thanks to the experience and continuous work after more than 30 years valuing properties on the island.
On our website, you can find a free online property evaluator (we encourage you to try it) and it will be able to give you an approximate or initial market value for your property according to the reference of the cadastre, the characteristics of the property and other variables. However, this value should be taken only as a generic or initial approximation as there are more variables that an online tool does not have the capabilities to consider or include. This is why we always prefer to complete that initial and automated valuation with a real and detailed valuation made by one of our experienced agents. Our valuation method is not only based on the study of all these previous variables but also on others that only the experience can provide you with. In addition, we share and compare the different valuations made by each of the agents part of Portal Menorca, to reach a final figure by which the owner and the agency agree to put the property for sale.
If you want to take the step of selling your property and want us to help you throughout the process, our agents at Portal Menorca will be happy to help you with all the doubts you may have. Contact us!