Types of reviews
We continue with the second part of our article Real Estate Valuations.
Below we will describe the types of evaluations that you should know according to their purpose:
Valuations for commercial purposes: It is mainly used to carry out private actions between individuals, such as valuation of inheritances, separation of assets, family distributions, asset valuations due to dissolution of companies, sales, investment studies, etc.
Valuations for mortgage guarantee purposes (Appraisal): It is regulated by ORDER ECO/805/2003, which determines that mortgage valuations will be used for the following purposes:
- To value assets that serve as mortgage guarantee for credits or loans that form or will form part of the coverage portfolio of mortgage securities issued by the entities, promoters and builders referred to in art. 2 of RD 685/1982, of March 17.
- To value assets that serve as coverage for the technical provisions of insurance entities required in RD 2486/1998, of November 20.
- Determination of the assets of real estate collective investment institutions regulated in RD1393/1990, of November 2.
- Determination of the real estate assets of the Pension Funds regulated in RD1307/1988, of September 30, which approves the Regulation of Pension Plans and Funds.
Assessments for administrative purposes: They are those carried out in accordance with administrative provisions. Among these valuations are those for expropriation purposes, cadastral and fiscal.
Cadastral valuations: They are those whose purpose is exclusively to obtain the cadastral value for tax purposes. The valuable assets may be urban or rustic in nature.
The cadastral value is used to calculate the real estate tax (IBI), and to calculate the taxes on Estate, Income, Transmissions, Donations, Expropriations and Declaration of Heirs.
Within the scope of cadastral valuations, contradictory expert evaluations are frequently presented by the owners (natural or legal persons) when a disagreement arises between the cadastral valuation carried out by the Treasury and the one estimated by the owner.
Municipal assessments: It is used to calculate the tax on the Increase in Value of the property, also called Capital Gains tax. It is a value close to the market value, sometimes even higher than this, which is periodically updated, always upwards, by each City Council and the new values are communicated to Notaries and Registrars for the settlement of the Capital Gains tax on the transfer of any type. of property.
Valuations for assurances: Valuations for property insurance should only take into account the value of the construction, since this component of the property is the only one that can deteriorate in an accident and therefore the only one that must be insured.
Logically, the valuation for insurance must include all those expenses necessary to be able to reproduce the building in the event of a total loss. That is, we will include project and technical management fees, writing expenses, taxes, etc.
Valuation methods
| Method | What do you value? | What does it calculate? |
| Cost or Replacement. | Buildings and building elements. | Gross or net replacement value. |
| Comparison. | All types of properties meeting certain requirements. | Adjusted comparison and comparison value. |
| Income Update. | All types of properties capable of producing income and the real rights indicated in art. 52.2 meeting certain requirements. | Updated value that allows determining both the market value of a certain asset and its mortgage value. |
| Residual. | Urban and developable land, whether built on or not. | Residual value that allows determining both the market value of a certain asset and its mortgage value. |
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