Recent Supreme Court rulings have significantly strengthened the position of the taxauthorities in procedures for verifying values in Property Transfer Tax (ITP).
Specifically, the High Court has confirmed that the Treasury may use mortgage appraisals as the tax base when they exceed the price declared in the deed.
This line of case law, consolidated in STS 1915/2024 (4 December), STS 1942/2024 (9 December) and STS 1976/2024 (17 December), represents a significant change in real estate tax practice and requires both buyers and advisors to rethink their strategy.
The core of the debate lies in Article 57.1.g of the General Tax Law, which allows the Administration to verify the value of the transferred assets by means of the mortgage appraisal carried out for the granting of loans.
The Supreme Court has confirmed that this method:
– Is a legally valid means of verification.
– Does not require additional justification when there is an objective discrepancy between the declared price and the appraisal value, although the action must be technically justified.
– Can be used without the need to provide a supplementary administrative expert report.
The practical consequence is clear: if the bank appraisal is higher than the registered price, the Administration may issue a supplementary assessment based on that value, while respecting the taxpaye’s right to challenge it.
Although the mortgage appraisal strengthens the Administration’s evidentiary position, it does not constitute a formal reversal of the burden of proof. The taxpayer retains the right to challenge, having to technically prove that the appraisal does not reflect the real value of the property, justify unique circumstances (state of repair, encumbrances, limitations, etc.) or promote a contradictory expert appraisal with sufficient technical support.
In this new context, prevention and specialised advice are essential to minimise tax contingencies and avoid unexpected additional assessments.
At MDG Advisors, we analyse each real estate transaction with a preventive and strategic approach, designing solutions adapted to possible tax audits and optimising our client’s tax security.