Who is affected by the new Land Registry Law: what you should know if you want to sell your house or buy a home. The new cadastral value is the one that will set the sale price of a property and you should inform yourself. And it is that the new law can bring negative consequences for your sale if you do not inform yourself properly. Either for the Plusvalia, the income statement, and specifically, but no less important, in the case of sales of inherited properties.
The year 2022 started with big tax reforms for residential homeowners. Spain is a small country mostly owned by owners, with little urban rental space. And it is also a country with a global regional variation that only increases tax inequalities between different areas. For all this, and wherever you live, the sale can go wrong if you are not informed of the new Land Registry Law.
Now more than ever, if you want to sell your house or buy a home, you must put yourself in the hands of an expert real estate professional who will advise you on legal and tax matters. So let's see what you should know if you want to sell your house or buy a home.
Background of the Real Estate Cadastre Law
Before the new year began with the Cadastre Law, there was already a great debate with the also recently approved New Housing Law on February 1, 2022. The new law caused a stir from the private and public sectors for trying to regulate the real estate market in an interventionist way and its results are yet to be seen.
It is worth saying that this law is also the first to be approved in this country to regulate hot topics such as evictions, the maximum rental price, especially in the most "stressed" areas, ease of access to housing or the price of public rent.
The Housing Law and the Cadastre Law
The Housing Law is also an aid to small owners who rent their home, with income tax bonuses that can reach up to 90%, but it stresses even more owners who, for whatever reason, have empty homes and do not provide them for rent.
The Housing Law was born due to the great growing demand for residential rental housing in Spain. It especially affects its control and its price, setting a new reference index for rental prices at the state level.
We will not enter to assess the positive or negative effects of said regulations, we can discuss it and advise you privately if you wish by contacting us. But it is at this point where the housing laws affect the content we are dealing with, the Cadastre Law.
And what is the Cadastre?
As you know, the cadastre is the national organism that centralizes the data of all the houses in Spain in direct dependency of the ministry of finance. As the cadastre says on the website itself "The Real Estate Cadastre is an administrative record under the Ministry of Finance and Public Function in which rural, urban and special characteristics real estate is described. It is regulated by the Consolidated Text of the Law on Real Estate Cadastre, registration in it is mandatory and free.
Who is affected by the new Real Estate Cadastre Law: what you should know if you want to sell your house or buy a home
As we said, the new cadastre law is important for owners who want to sell their property and especially those who want to become owners, or what is the same, acquire a home. And here, previous particularities, we find the different cases that can lead you to buy or sell your home: purchase of a first home, sale of an inheritance property or second residence, real estate investment... although we will focus on the main segment , which is as we say, the sale between individuals for their own residential use.
And why is the cadastre now so relevant in the real estate sale?
Simply, because the new cadastral value is the one that will set the sale price of a property. Despite the fact that until a few months ago the cadastre was something that hardly anyone took into account at a private level (just like, let's be honest, the certificate of occupancy or even the energy certificate of your home) the new national policies regarding housing, social commitment and sustainable growth, have meant that the regulation of the sale and purchase prices of housing now become the direct responsibility of the ministry of finance. Until December 31, 2021, the reference value of a property was based on the real, registered and cadastral value. From January 1, 2022 this changes and the reference value becomes that of the cadastre in direct dependence of the Ministry of Finance.
So... Can it be sold above the cadastral value? Well, if you get proper advice, it can even be good for you.
The cadastral reference value can be claimed. And there are ways to close the sale without having to write above the assessed value to help your buyer without harming you.
We tell you how! Send us a Whatsapp at the number 637838627 and we will call you.
This change is important in its essence for two reasons:
1. The data used to set the cadastral value are currently deeds prior to 2022 in a specific area or property, with which the price may not coincide with that of an appraisal for sale.
2. For the purposes of taxation, THIS NEW TAX BASE may increase transfer taxes and, in particular, inheritance taxes must be taken into account. With which, signing the transaction may not be paid to either the seller or the buyer... And it may vary from one year to the next.
And as if that were not enough... The law requires that it is now the owner who claims and justifies these price variations in the case of buying for a price higher than the estimated one. With this change, an attempt is made to avoid fraud (selling a home below the purchase price to save some taxes) or excessive profit (selling above the price) must be justified and, in addition, it will be unprofitable for the buyer, with which the price you had planned will surely change and go down. That means... that we do not recommend selling a house or flat below the cadastral value.
At this point it is very possible that you are wondering then what is the use of revaluing your house for sale by applying small reforms or even making energy reforms on the property. Well, this is where the figure of the real estate agent comes in. And it is that the new law can bring negative consequences for your sale if you do not inform yourself properly. Either for the Plusvalia, the income statement, and specifically, but no less important, in the case of sales of inherited properties.
Can you sell and/or buy your home at a good price?
It is possible that since you thought about putting your home up for sale, they have recommended you over and over again to appraise your property to find out the price of your home. And if you are a buyer, you have been told a thousand and one nights that it is best to go from private individual to private. As you have seen in this article, we have spent a few months now in which the purchase and sale is now more than ever regulated and reviewed at the ministerial level, which is not the time to risk it, even less when surely new changes will appear in the coming months that expand, modify and even hinder residential real estate transactions in the private sector.
If you still believe that the price is decided by you, or even by us, we are sorry to tell you that it is not. But we can assure you that with our experience and knowledge we will not only be able to establish the optimal sale price for your home, we will also be able to strategically adjust prices at each stage of the process, especially in the upcoming changes of the year and cadastral updates.
So whenever you want, call us, and we'll get to work for you and your interests.