What is Property Appraisal for Inheritance in Spain
How to Appraise a Property for Inheritance in Spain. Property appraisal for inheritance involves assigning a value to a real estate asset to facilitate its distribution and inheritance allocation.
In cases where disagreements among heirs hinder reaching an agreement, obtaining an accurate valuation of the property can contribute to a better understanding and resolution.
Who performs the appraisal of the assets? When should the property be appraised for inheritance? What taxes are paid in inheritance? These are common questions posed by my clients, and I will address them all in this article.
If you want to read specific content directly, you can find the contents of this page in the box above. As a specialized property valuation expert, I have summarized what you need to know about how to make a home appraisal for inheritance.
How to Appraise a Property for Inheritance
We understand that the distribution of assets in an inheritance can often lead to disputes and disagreements among heirs. Knowing how to appraise a property for inheritance is essential to improve communication and understanding among the beneficiaries.
In this article, focusing on the division and distribution of the inherited estate, we aim to describe several aspects to consider when appraising assets for inheritance. We will discuss when and how this appraisal should be conducted in a proper and organized manner.
It is crucial to avoid common mistakes that occur when appraising apartments, commercial properties, parking spaces, or land during the distribution process among heirs.
Understanding the True Value of a Property in an Inheritance
When we talk about knowing the true value of a property in an inheritance, we are referring to understanding the market value of the property being appraised. This is commonly known as the value that a third party would be willing to pay for that property.
By obtaining this real value, each of the heirs is not disadvantaged in terms of the valuation of the assets. The partition of the inheritance can be carried out, basing the distribution on an objective value of the immovable property.
Remember that nothing breaks up families more than an inheritance, and an appraisal of assets promotes understanding
How to Appraise a Property in Spain
The process of appraising a property in Spain, whether it is for general purposes or specifically in the context of an inheritance or divorce, which as you may know is the niche I exclusively specialize in, depends on the appointed real estate appraiser.
The overall content of an appraisal report is at the discretion of the appraiser. While it is advisable to adhere to the methodology established in the ECO 805/2003 regulation, there are certain criteria that are based on the appraiser’s professional judgment.
For example, one appraiser may estimate the value of an accessory element of a property, such as a tool shed, at one value, while another appraiser may estimate the same structure at a different value. If both appraisers act in a professional and objective manner, the difference between their estimates should be minimal.
How to Appraise a House in an Inheritance
As I mentioned in the previous paragraph, the ECO regulation governs the methods for appraising a house in an inheritance or any other context.
Typically, a house in an inheritance is appraised using the comparative method of comparable properties or, alternatively, the cost approach based on the construction cost of the property. The choice of method depends on factors such as the type of property, its location, and the market conditions.
The main objective of appraising a house in an inheritance is to determine its current market value and ensure an equitable and objective distribution of assets.
Here’s a piece of advice:
Failing to establish the market value of the property in an inheritance would be misleading and could result in one heir being disadvantaged in favor of another. I can guarantee that.
Anything other than establishing the market value of the property in an inheritance would be a falsehood and would result in one heir being harmed to the benefit of another, I can guarantee you that
Real Valuation of Assets in an Inheritance
In addition to the previously mentioned properties, it is necessary to determine the real valuation of all assets in an inheritance process. The most common assets include properties such as houses, land, garages, and storage units.
Inheritances also involve the need to obtain the market value of assets such as vehicles, boats, furniture, jewelry, and artwork. All of these valuations are essential for reaching an agreement and ensuring an optimal distribution among the heirs.
When are the assets in an inheritance valued in Spain
It is important to know when the assets in an inheritance are valued.
A valuation of the assets in an inheritance should always be done at the time of distribution among the heirs.
There are two main stages in the succession process. Firstly, the acceptance of the inheritance and the payment of taxes, and secondly, the distribution and allocation of assets.
During the acceptance of the inheritance, the assets and debts left by the deceased are accepted. The acceptance entails the payment of taxes, which vary depending on the autonomous community where the deceased resided. Read on, and I will explain the value you need to establish for the inheritance tax. Updated from January 1, 2022.
During the distribution and allocation of assets, the real valuation of the properties is necessary to ensure an equitable distribution among the parties.
In some cases, when the heirs cannot reach an agreement, they may need to resort to a judicial distribution of the inheritance. I will summarize the judicial distribution of an inheritance in the following paragraphs.
Judicial Appraisal of a Property in an Inheritance
The judicial appraisal of a property in an inheritance is the process in which a court-appointed appraiser provides a value for the property to facilitate its distribution among the heirs.
The judicial appraisal of a property in an inheritance is carried out using established methodologies. Therefore, the court-appointed appraiser must be an expert in property valuation.
In addition to a court-appointed appraiser, a dativo partitioner is required. The partitioner acts as a mediator in the inheritance process and takes the necessary steps to prevent disputes among the heirs.
What is a Court-Appointed Appraiser
A court-appointed appraiser is an expert in appraisals and valuations appointed by a court to provide an independent valuation of a property in the context of a legal proceeding. The role of the court-appointed appraiser is to examine the property in question and gather information about the real estate market and other relevant factors that may influence the property’s value.
Once the court-appointed appraiser has collected all the necessary information, they will provide an impartial and objective valuation of the property. This valuation is submitted to the court as a tool to assist them in determining how the property should be distributed in the judicial distribution process of an inheritance.
Which Taxes are Paid in an Inheritance in Spain
There are two taxes that must be paid when accepting an inheritance:
- Inheritance tax: Inheritance tax is a state tax whose administration is delegated to each autonomous community. To analyze the cost and administration of this tax, it is necessary to know in which autonomous community the deceased resided. There is a legally established period of six months for its settlement, which can be extended for an additional six months.
- Municipal capital gains tax or tax on the increase in the value of urban land: This tax is regulated by each municipality, and its value is based on the cadastral value of the property and the length of time the deceased owned the property.
Value of the Inheritance for Inheritance Tax
Since January 1, 2022, the value of the inheritance for inheritance and gift tax must be determined through the cadastral value provided by the land registry.
This value is established by the municipal cadastre, which obtains an average from the buying and selling of properties in the area. This valuation is carried out using information obtained from the notary association and the property registry.
Undoubtedly, this represents a significant change in the valuation of assets in inheritances and their acceptance.
What to consider to determine the value of the inherited property
Through the following paragraphs of this article, I want to provide you with some tips to consider when determining the value of an inherited property.
Aspects such as selecting an appraiser, understanding the characteristics of the property, applying the appropriate regulations for property valuation, and even the preliminary phase of document consultation are important in an inheritance process.
Remember that an inaccurate valuation of assets in an inheritance can disrupt a fair distribution among heirs.
Appraiser for inherited properties
Always seek an appraiser specializing in inherited properties. Find out and identify who can assist you in valuing the property in an inheritance distribution. Through our contacts or even online, we may be able to find an appraiser who can help with the valuation of the assets, but…
¿Is that person the appraiser I need?
When it comes to conducting an appraisal for the distribution of an inheritance, the importance of selecting the right appraiser cannot be overstated. It serves as a guarantee of success.
In this article, I want to address a series of measures and best practices that should be followed for an accurate appraisal and valuation of inherited properties. However, before doing so, it is important to know how to choose the appropriate appraiser based on the purpose of the appraisal. Understanding the purpose of the appraisal and whether its intended use is regulated or not is crucial, as it should adhere to the criteria established by regulations.
My first and most important recommendation is to choose the right appraiser, preferably someone specialized in the specific subject matter you need to address.
Here, I will describe what I believe are the characteristics of a proper appraisal for inherited properties.
Remember that you can also learn about other services I offer through this page.
Same appraiser for all inherited properties
Contacting an expert and types of experts
In many cases, inherited properties are located in various municipalities or even different autonomous communities. It is highly recommended, or I would even say necessary, to have the same appraiser conduct the appraisal for all properties, regardless of their locations.
The valuation criteria in selecting comparables, the factors to consider in the adjustment table, and even the structure of the appraisal report may vary depending on the appraiser.
Consolidating all the necessary real estate appraisals for the distribution of the inheritance in a unified manner and timeframe is essential to avoid conflicts among the heirs.
Consistency in the appraisal approach for all the properties in the inheritance is key.
Characteristics of the property for an accurate inheritance appraisal
Knowing and assessing the characteristics of the property is essential for obtaining an appropriate market value in an inheritance appraisal.
The valuation of interior aspects of the property such as size, rooms, and condition should also consider the external features of the property. Taking into account the location of the property, public transportation connections, green areas, and essential services can have varying degrees of impact on its value.
Any circumstance, no matter how small it may seem, can influence a proper appraisal in an inheritance.
How to perform an error-free property appraisal for inheritance
The first and most important step in a property appraisal for inheritance is to understand the property’s characteristics and amenities. Knowing the property’s address is crucial. Often, the actual address of the apartment or premises being appraised does not match the address registered. In such cases, one should refer to the cadastral data (available at the cadastre office) and mention this fact in the appraisal report. At this point, we will take the actual situation of the property as the basis for the appraisal.
A common mistake is to prepare a report with incorrect data. If the parameters and data are initially set incorrectly, the appraised value will differ significantly from reality. In general, such a report would be challengeable in all respects.
Choosing appropriate comparables
One of the methods used in property appraisals for inheritance is the comparison of properties. In this case, choosing appropriate comparables is crucial for an accurate appraisal.
This method relies on finding a sample that closely matches the location and characteristics of the property being appraised. Therefore, we should always search for comparables that are similar in terms of property type, size, floor location, location, and even boundary verification.
I have personally come across cases where the chosen comparables were not even remotely from the same neighborhood or had similar characteristics. In such cases, a contradictory appraisal report should be prepared, reflecting all these aspects that significantly affect the property value.
Maintaining consistent adjustment percentages
The criteria that an appraiser must decide upon and address in their report should be as precise and objective as possible. It should follow a consistent and continuous criterion throughout the adjustment table. It is illogical and abnormal for the appraised property to have different values for similar characteristics when compared to different comparables.
There have been cases where discrepancies exist among comparables. That is, two comparables with the same characteristics and quality are appraised differently. This means that if we deduct 0.5% from the value based on the «bathroom» item compared to one comparable, we should deduct the same percentage for the others in the table.
Basic knowledge of the methodology for conducting an appraisal for inheritance is essential
There are other cases, in my opinion, that are very serious, where the appraiser does not correctly apply the current regulations. Understanding the purpose of the appraisal or analyzing the local real estate market through a study of offers should be preliminary tasks before preparing an appraisal report.
Knowing the regulations, types of appraisals, and methods to carry them out is undoubtedly the minimum requirement for an appraiser. The following are aspects that a good real estate appraiser should definitely know:
- Understanding the applicable regulations.
- Learning the theory underlying a valuation.
- Performing real estate valuations for different types of properties.
- Identifying the structure of the appraisal report, its strengths and weaknesses, and how it is delivered to the final client or the court.
- Defining the basic concepts related to property appraisals and assessments.
- Delving into concepts related to real estate valuation. Understanding the cost, comparison, income capitalization, and residual methods.