PROPERTY VALUATIONS BY EXPERTS OF THE SPANISH TREASURY WHEN ARE THEY INCORRECT?

07 Dec PROPERTY VALUATIONS BY EXPERTS OF THE SPANISH TREASURY WHEN ARE THEY INCORRECT?

For the valuation of a property to be in accordance with the law, it must be issued by an appropriate official and determine the physical and legal circumstances that individually concur in the object of verification. Direct and personal recognition of the estate is the general rule.

The CENTRAL ECONOMIC-ADMINISTRATIVE TRIBUNAL (TEAC) has repeatedly established that:

a) The valuations carried out by the Tax Administration, in addition to being issued by a trained official, must be reasoned, expressing the criteria, elements of judgment or data considered to determine the value to which they refer. And the proven value is only understood to be motivated when the valuation carried out is singular and not by generalized reference. Therefore, generic valuations (referring to circumstances such as age, quality of construction, conservation or price of similar acquisitions) do not fit, but the physical and legal circumstances that individually concur in the object of verification must be determined or indicated.

In any case, it is required that the expert reasons the application of the average prices and that there is homogenization of the comparable ones, whose use must be justified (TS 26-11-15, EDJ 237709).

b) The direct and personal recognition of the property constitutes the general rule. Only in very specific cases, and which must be reasoned and substantiated with constancy in the file, will the lack of personal inspection be admitted (TS 29-3-12, EDJ 87736; RGGI art.160(2).

So, for example, when the expert in charge of the tax agency assesses through the method of average market prices, without making a visit to the property, the assessments considered will incur in a lack of individualization of the properties.

As for the “witnesses” (in the jargon of the Appraisals this is how the samples of other comparable properties chosen are called) the Tax Agency has to justify the requirement of homogeneity, that is, that we are facing comparable properties explaining in a concrete way the characteristics (typology, use, constructive quality, state of conservation) that make the chosen witnesses can be considered comparable,  without it being worth that only generic considerations are made that can be used for any assessment.

For all these reasons, the TEAC in several judgments has declared the annulment of the valuations of the Treasury that do not meet the minimum requirements of motivation necessary for their validity, and that of the liquidation and sanction that could be imposed.

(for further refinement on the subject, see a full February 2022 TEAC Judgment)