How to amend the surface area of a property in the Cadastre and recover overpayments

Many property owners frequently discover that their property registration in the Cadastre contains errors, especially about the property's surface area. This is no trivial problem, as a surplus in the registered surface area will increase the cadastral value, affecting taxes such as Real Estate Tax (IBI) and the municipal capital gains tax. Rectifying these errors is essential, not only to avoid undue tax charges but also to receive a refund of overpayments. José María Salcedo, managing partner of Salcedo Tax Litigation, explains how to obtain a possible refund of undue income.

Procedures for correcting errors in the property's cadastral surface area

There are two main procedures for addressing these errors:

Correcting discrepancies: this is regulated by Article 18 of the Revised Text of the Law on Real Estate Cadastre (TRLCI) and corrects errors related to property-specific data or characteristics, including surface area, but when the error is the result of misapplication of a legal rule (terraces, porches, etc.), not due to the measurement itself. However, it does not apply to discrepancies in urban parameters or evaluative rate tables.

Rectifying errors: this is regulated by Article 220 of the General Tax Law (GTL) and corrects errors arising from the improper application of urban planning information or errors in measuring the surface area.

The Cadastre prefers the discrepancy correction procedure. Why? The Cadastre and the Treasury generally prefer discrepancy correction to rectifying errors. Resolving discrepancies takes effect from the resolution date or the end of the time limit for claims, whereas rectifying errors takes effect retroactively from the date of the error.

The Central Economic-Administrative Court (TEAC) is in favour of the Treasury. Specifically, a recent resolution dated 26 September 2023 (00/01822/2021) supports the discrepancy correction procedure to correct errors in the cadastral surface area. According to its resolutions, the procedure for rectifying errors would not be applicable in these cases, as it would imply substantially modifying the administrative act.

Specifically, the Court considers that "the circumstances required for rectifying errors do not exist, given that the modification of the built surface, the uses and values taken into consideration are sought, all of which require interpreting the legal and technical rules, as well as the titles considered, also entailing a substantial alteration of the administrative act". All of the above refers to a previous resolution of 19-1-2016.

Furthermore, it considers the use of the error rectification procedure to be inappropriate because it considers, referring to a ruling of the TSJ of Catalonia on 4-12-2015, that "the rectification of errors cannot be used when the intention is to revoke the act or to alter its essential content or some of its extremes or substantial elements. Therefore, modifying a property's cadastral record, i.e. the owner's name or the property's surface area, cannot be considered a mere rectification of a factual error that can be corrected by the error rectification procedure, as it is, on the contrary, an essential element of the description of the cadastral property, knowing its real owner, as well as its surface area, at least from the cadastral point of view".

Retroactive effect and refund of undue income

"The problem with requiring taxpayers to use the procedure for rectifying discrepancies to correct surface area errors in the cadastral valuation is that it is intended that the resolution issued does not have retroactive effects," says Salcedo. What is the consequence? Taxpayers can make tax savings in the future, both in the IBI quota and in a possible sale of the property in the municipal capital gains tax. However, as the managing partner of Salcedo Tax Litigation reminds us, they will not be able to recover what was overpaid in previous years. The Treasury prefers to refrain from retroactive measures after detecting an erroneous cadastral value because the property's surface area in the Cadastre was larger than the real one.

In short, correcting discrepancies is not retroactive, which limits the possibility of applying for retroactive refunds of overpaid taxes. However, the Supreme Court has pointed out in several rulings that refunds can be obtained for previous years if the error existed in those periods.

For José María Salcedo, with the Supreme Court rulings in hand, a refund could be obtained for the years before the discrepancies were corrected. This is as long as the surface area error existed during the fiscal years for which the refund of undue income is claimed because the tax had been paid according to a higher cadastral value than what would correspond according to the property's actual surface area.

Fast track for undue revenue refunds

The Supreme Court is currently ruling on a cassation appeal to determine whether – a refund of the undue payment can be directly requested when reducing the cadastral value by correcting discrepancies. This could significantly simplify the refund process without having to initiate special review procedures.

By Order of 8 February this year (appeal 5519/2022), the Supreme Court agreed to decide whether "in those cases in which a property's cadastral value is reduced affecting final Property Tax (IBI) settlements, to determine whether a refund of undue income derived from the above can be requested directly without requesting, concerning the settlements, a review procedure as provided for in Article 221.3 of the GLT, all based on the provisions of Article 224.1, paragraph 3 of the GLT".

To conclude, cadastral surface area errors must be corrected to avoid undue tax burdens. Although the procedures can be complex, being aware of the options available and possible regulatory changes will make it easier for taxpayers to correct these discrepancies and obtain refunds of undue income.