Start Date
25-11-1988 9:30 AM
End Date
25-11-1988 12:00 PM
Description
The paper proposes methods that could be used by the Spanish Fiscal Administration to unify real estate values for tax purposes and to establish the suitability and applicability of econometric models, such as multiple regression analysis. These are widely and successfully used by assessors in the United States as a mass appraisal tool. The empirical models are built in order to explain the evolution of real estate market prices in terms of certain measurable characteristics, such as location, size, age, quality of construction materials, use of the building, etc . Important fiscal reforms are taking place in Spain, and they are certainly affecting real estate assessment. As an assessor in the Real Estate Appraisal Department, Ministry of Public Finances, Spain, I have experienced the problems that arise when the same building is given different values for different fiscal purposes, and this fact is especially worrying for the taxpayer. This reason, in and of itself, should be sufficient to justify the search for a unique fiscal real estate value, but we also have recent judicial recommendations in this direction. It should be, thus, one of the final goals of the coordination tax process and, therefore, a task the fiscal administration should undertake. The power of multiple regression analysis for mass appraisal purposes has been sufficiently tested in the United States and assessors using this tool attain degrees of accuracy seldom attained by other techniques which are commonly used in Spain, such as the cost approach or the income approach. Building such a model implies determining which real property characteristics are found to be significant in explaining variation in sales prices. Those characteristics are defined as independent variables or predictors and are used to estimate the dependent variable, which is the market value of the property. However, it has been commonly observed that only a few dozen of the characteristics can be considered statistically significant in any given regression model. In the actual Spanish legislation there is a trend, as we can deduce from the analysis of the rules which guide the estimation of real estate value for tax purposes, toward connecting it to the market value. Once the market value has been defined as the amount that a buyer should pay for a property at a specified moment, we shall be able to establish that this market value could be the unique fiscal value useful for the whole range of taxes that are levied, not only on the property, but also on the transfer of ownership and on the collection of rents from real estate.
Publication Date
November 1988
Recommended Citation
Fernandez-Castaño, Marina, "Un sistema de valoracion uniforme a afectos fiscales en España" (1988). International Research Symposium. 13.
https://researchexchange.iaao.org/irs/irs88/sessions/13
Un sistema de valoracion uniforme a afectos fiscales en España
The paper proposes methods that could be used by the Spanish Fiscal Administration to unify real estate values for tax purposes and to establish the suitability and applicability of econometric models, such as multiple regression analysis. These are widely and successfully used by assessors in the United States as a mass appraisal tool. The empirical models are built in order to explain the evolution of real estate market prices in terms of certain measurable characteristics, such as location, size, age, quality of construction materials, use of the building, etc . Important fiscal reforms are taking place in Spain, and they are certainly affecting real estate assessment. As an assessor in the Real Estate Appraisal Department, Ministry of Public Finances, Spain, I have experienced the problems that arise when the same building is given different values for different fiscal purposes, and this fact is especially worrying for the taxpayer. This reason, in and of itself, should be sufficient to justify the search for a unique fiscal real estate value, but we also have recent judicial recommendations in this direction. It should be, thus, one of the final goals of the coordination tax process and, therefore, a task the fiscal administration should undertake. The power of multiple regression analysis for mass appraisal purposes has been sufficiently tested in the United States and assessors using this tool attain degrees of accuracy seldom attained by other techniques which are commonly used in Spain, such as the cost approach or the income approach. Building such a model implies determining which real property characteristics are found to be significant in explaining variation in sales prices. Those characteristics are defined as independent variables or predictors and are used to estimate the dependent variable, which is the market value of the property. However, it has been commonly observed that only a few dozen of the characteristics can be considered statistically significant in any given regression model. In the actual Spanish legislation there is a trend, as we can deduce from the analysis of the rules which guide the estimation of real estate value for tax purposes, toward connecting it to the market value. Once the market value has been defined as the amount that a buyer should pay for a property at a specified moment, we shall be able to establish that this market value could be the unique fiscal value useful for the whole range of taxes that are levied, not only on the property, but also on the transfer of ownership and on the collection of rents from real estate.