Almost 1,100 municipalities have decided to review the cadastral value of their urban properties as a block for this year 2020. The list of these municipalities has been published this Saturday in the Official State Gazette and includes from small towns to large cities and provincial capitals such as Valencia, Seville and Zaragoza. In 16 provincial capitals the cadastral value increases and in 3 it decreases.
In practice, this will translate into a rise in the Real Estate Tax (IBI). Although the tax rate does not change, the base does change, which is the cadastral value. Therefore, the rise will affect millions of taxpayers. In addition, the cadastral value affects other taxes such as personal income tax, municipal capital gains, wealth tax.
This Saturday, two regulations affecting the cadastre have actually been published. On the one hand, it is Royal Decree-Law 18/2019 by which certain measures are adopted in tax, cadastral and social security matters. This regulation includes the approval of the coefficients for updating the cadastral values of urban real estate for 2020. And on the other is the list of affected municipalities, a total of 1,092.
The coefficients that have been set are as follows. For those municipalities whose year of entry into force of the presentation of values (that is, of the last update of the cadastre) is between 1984 and 1988, the update coefficient will be 1.05 or, what is the same, of the 5%. For those municipalities whose year is between 1989 and 2003, the coefficient will be 1.03, that is, 3%. And for the municipalities whose year of entry into force of the last update is 2011, 2012 or 2013, the coefficient will be 0.97, that is, a reduction of 3%, since the values were set at levels not yet the housing bubble had completely deflated.
Among the nearly 80 upward revisions of the cadastral value of 5%, there are not many large municipalities, but there are some such as Martorell (Barcelona), O Porriño (Pontevedra) and Marín (Pontevedra), for example. Among the nearly 90 municipalities with downward revisions of 3% are three provincial capitals (Zaragoza, Castellón de la Plana and Guadalajara) and municipalities such as Azuqueca de Henares (Guadalajara), Miranda de Ebro (Burgos), Talavera de la Reina (Toledo), Ronda (Málaga), Sagunto (Valencia), Águilas (Murcia), San Martín de la Vega (Madrid) or Tudanca (Cantabria).
The vast majority of municipalities that have revised the cadastral values for 2020 do so with the coefficient of 1.03, that is, a 3% increase. Among these are provincial capitals such as A Coruña, Cádiz, Córdoba, Girona, Granada, Huelva, Huesca, Jaén, Logroño, Lugo, Palencia, Seville, Tarragona, Teruel, Valencia and Valladolid. But there are also hundreds of municipalities of all sizes, including, for example, Oleiros (A Coruña), Denia and Santa Pola (Alicante), Macael (Almería), Navia (Asturias), El Barco de Ávila (Ávila), Arenys de Mar, Badalona, L’Hospitalet de Llobregat (Barcelona), Plasencia (Cáceres), La Línea, San Fernando and Sanlúcar (Cádiz), Manzanares (Ciudad Real), Puente Genil (Córdoba), Lloret de Mar, Peralada and Palafrugell ( Girona), Almuñécar (Granada), Ayamonte, Isla Cristina and Cartaya (Huelva), Cazorla (Jaén), Mogán (Las Palmas), Guissona (Lleida), Manzanares el Real (Madrid), Torremolinos (Málaga), Cartagena (Murcia) , O Barco de Valdeorras (Orense), Aguilar de Campoo (Palencia), Vigo, Baiona, Poio and Vilanova de Arousa (Pontevedra), El Rosario and Puerto de la Cruz (Tenerife), La Rinconada (Seville), Reus (Tarragona) .
How to know what is the year of entry into force of the presentation of values of each city council? In the order published today by the BOE, next to the name of the municipality is the corresponding year.
Effect on IBI and personal income tax
As the approval of the 2020 Budget law will not take place on time, and since the cadastral values have an immediate impact on the Real Estate Tax (IBI), which is accrued on January 1 of each year, the The government has approved the update by decree law.
The cadastral value is a fundamental piece of information to determine what must be paid for the IBI, the main source of income for city councils. But the increase in the cadastral value also implies paying more personal income tax, since an imputation of income is made based on its cadastral value and how recent the review has been. In this case, paradoxically, an upward revision of the cadastral value can translate into a reduction in personal income tax if the previous revision was more than 10 years ago, since with the revision a lower rate is applied. Thus, the norm says that the attributable income for each urban property is made with the application of the following percentages:
- In general, 2% will be applied on the cadastral value of the property that appears in the receipt of the Real Estate Tax.
- 1.1% for those properties whose cadastral value has been reviewed, modified or determined through a collective valuation procedure that has entered into force in the tax period or within the ten previous tax periods.
The cadastral value is also the fundamental reference when calculating the Municipal Tax on the Increase in the Value of Urban Land, known as municipal capital gain, which taxes the increase in value that occurs in the land since the purchase of the property until the date of its sale. In addition, the cadastral value can serve as a reference for the Tax on Transmissions and Documented Legal Acts and in the Tax on Inheritance and Donations.
To update the cadastre there must be a prior request from the city council, it is also necessary that at least five years have elapsed since the entry into force of the last general collective valuation procedure, and that there are substantial and homogeneous differences between the values market and those that served as the basis for determining the current cadastral values.
According the statement of reasons for the decree law, “With the approval of this measure, it contributes to reinforcing municipal financing, fiscal consolidation and budgetary stability of local entities, and will be applicable in municipalities that meet the requirements set forth in the regulatory framework enabled for this purpose, essentially the request made by each one of the town councils concerned, which could not see the budgetary forecasts that they would have made, counting on said update, be fulfilled if the measure is not approved “.
The standard published in the BOE establishes that the update coefficients (5% for the years 1984-88, 3% for 1989-2003 and -3% for 2011-2013, depending on the year of entry into force of the presentation of values of each municipality), are applied as follows:
a) In the case of real estate valued according to the data in the Real Estate Cadastre, it will be applied to the value assigned to said assets for 2019.
b) In the case of cadastral values notified in the year 2019, obtained from the application of submissions of partial values approved in the aforementioned year, it will be applied to said values.
c) In the case of real estate that has suffered alterations in its characteristics according to the data in the Real Estate Cadastre, without said variations having taken effect, the coefficient will be applied on the value assigned to such properties, by virtue of the new circumstances, by the General Directorate of Cadastre, with application of the modules that would have served as the basis for setting the cadastral values of the rest of the real estate of the municipality.