Can Spain charge extra tax on property?

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Q. Have you heard of an extra tax on purchasing a house in Spain if the government thinks the house is more valuable than the price you actually paid for it? My brother has just purchased an apartment and his solicitor has told him he may have to pay a few thousand euros more in taxes because he got the property at a low price. Is this legal in Spain?

R.R. (Costa Blanca)

A. Yes, it is legal. Your solicitor has done well to warn you about the upcoming extra tax bill.
The Spanish Tax Agency has tables of value, based on the official rateable value of properties, which is the ‘valor catastral’ used to determine the annual property tax, ie rates. These tables give the minimum value that can be declared for a property. For many years this official value was lower than the real market value.
However, in today’s depressed market, the official value is often higher than the price actually paid. This means the Tax Agency must apply the transfer tax to this value. It has happened to many purchasers.

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