The Catastro's valor de referencia: why the tax authorities ignore your price, and how to challenge it

There is a surprise that catches out many foreign buyers and heirs: when the time comes to pay the tax, the tax authorities do not look at the figure you put in the deed. They look at another one, the Catastro's "valor de referencia" (reference value). And if that figure is higher than what your property is really worth, you pay too much tax. The good news is that it can be challenged; the bad news is that it has to be done properly and on time.

What the valor de referencia is (and why it is not your price)

The valor de referencia was introduced by Law 11/2021, the so-called anti-fraud law, and it has applied since 1 January 2022. Since then it has been the taxable base for two taxes that affect you directly: the Impuesto de Transmisiones Patrimoniales (ITP, transfer tax), which you pay when buying a second-hand home, and the Impuesto de Sucesiones y Donaciones (ISD, inheritance and gift tax), which you pay when you inherit or receive a gift.

Be careful not to confuse it with the valor catastral (the figure that appears on the IBI receipt). They are different things. The valor de referencia is calculated each year by the Directorate-General of the Catastro, based on the prices of notarised property sales in the area. It is an individualised value for each property, which is why I cannot give you "yours" here: it depends on your property and on the year.

Why it can work against you

The rule is simple and, at times, unfair: if the valor de referencia is higher than the real price of your property, the tax is calculated on that inflated figure, not on what you paid. You end up being taxed on a value that does not match reality. This is especially common in these cases:

• Properties in poor condition or in need of renovation, where the valor de referencia does not reflect the real deterioration.
• Properties with particular features (rural land, easements, undeclared old building works) that the mass valuation does not capture.
• Purchases below market value (between relatives, due to urgency, inheritances with several heirs) where the real price is justified but is lower than the reference value.

How to challenge it (and why the order matters)

Here is the part almost no one knows: the valor de referencia CANNOT be challenged directly. You cannot write to the Catastro saying "I do not agree". The law only opens two doors to you, and it is worth knowing which one applies to you:

1. You pay the tax on the valor de referencia (to avoid incurring surcharges) and then request a correction of your self-assessment and a refund of the amount overpaid.
2. If it is the tax authority that issues an assessment against you, you appeal that assessment within the time limit.

In both cases, the tax authority decides after obtaining a mandatory report from the Directorate-General of the Catastro: in other words, the Catastro has to rule on your claim. And for it to succeed you need solid evidence: normally a valuation or an expert report showing that the real market value of your property is lower than the reference value. Without evidence, there is nothing to be done.

Deadlines: do not let them slip

A correction of the self-assessment can be requested within the limitation period — four years — but the sooner you gather the evidence and submit it, the better. If you receive an assessment from the authorities, the time limit to appeal is much shorter (usually one month), so it is not wise to leave the envelope unopened. Most claims that are lost are not lost because they had no merit, but because they arrived too late.

If you are about to buy or inherit a property on the Costa Blanca and the valor de referencia does not match reality, write to me before you file the self-assessment. I will assess whether it is worth challenging, what evidence is needed and through which route, so that you do not pay a single euro more than you should.