Property Transfer Tax on Inheritance, Sale, Purchase or Gift “Impuesto sobre Transmisiones Patrimoniales” (ITP) or “Transmisiones” is levied by regional government such as the Generalitat Valenciana (Government of the autonomous Region of Valencia) if the declared value of the land is less than its actual value. This has to be paid using Form 600 after the deeds are formalised (registered) and sent to the Inland Revenue and the “Registro de la Propiedad” (Land Register which may not contain the owner’s address).The Inland Revenue has up to 5 years to check whether the declared value is the real value of the property, if less, a new demand is made for a percentage of the difference between the real value and the declared value. There may also be a percentage surcharge in some municipalities.
Appeals can be made through a procedure known as “tasacion pericial contradictoria” before legal action is taken, by getting a valuation from a professional valuer of the market price or alternatively an appeal made through the courts. The only way of ensuring that the value of the property coincides with the administration’s assessment is to ask for a certificate from them before the transaction is formalised but this is not the usual procedure for ITP although is done for the “plusvalia” or local tax.
A percentage of the purchase price of the property is held back pending payment of a certain percentage of tax on the profit from a sale.
ITP is also paid as an inheritance tax. Heirs will only have to pay a percentage of the amount declared if the original owners sell their part of the property to their partner, children or friends during their lifetime but this becomes invalid if the transferee dies before the transferor
Property will be embargoed for non-payment.
A new law, 50/98 dated 31.12.98, reforming the “Ley de Haciendas Locales” (local tax laws) allows municipalities to pass tax ordinances affecting “their part of inheritances” i.e. the “Impuesto sobre el Incremento de Valor de Terrenos de Naturaleza Urbana” also called the “plusvalia” up to 95% in transmissions and constitution of rights as long as the heirs are descendants, spouse or ascendants (i.e. parents, grandparents etc.).
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