Selling a property below the autoavalúo — is it possible?

In Peru it's common for the autoavalúo declared to the municipality to be well below the property's actual value. When it's time to sell, many owners wonder whether they can put a price in the deed close to the autoavalúo, or even below it, to save on Alcabala and Income Tax. The short answer: it's not illegal to freely set the price, but SUNAT and the municipality have tools to adjust the tax base.

Three values that coexist in a transaction

• Autoavalúo (HR/PU): the value you declare yourself to the municipality each year, used as the base for the Impuesto Predial. Usually conservative.
• Market value: set by supply and demand. The price buyers actually pay.
• Agreed or sale value: the figure that appears in the minuta and the public deed.

What SUNAT can do if the price is too low

Second-category Income Tax taxes the capital gain at 5%. That gain is calculated on the difference between sale value and indexed cost basis.

SUNAT, based on the Income Tax Law and its regulations, can adjust the sale value to market value when there's a relationship between the parties or clearly undervalued prices are detected. In practice it tends to review:

• Transactions among relatives or related companies.
• Sales with large gaps versus the autoavalúo and sector comparables.
• Bank movements inconsistent with the declared price (unjustified patrimonial increase).

What the municipality can do

The municipality charges the Impuesto de Alcabala to the buyer. The base is the greater of the transfer value and the autoavalúo adjusted by IPM. That is:

• If you set a price below the autoavalúo, you still pay Alcabala on the autoavalúo.
• If you sell well below market, it doesn't directly affect Alcabala, but it does affect the buyer's future Predial (which will be based on the new autoavalúo).

Risks of underdeclaring the price

• Tax assessment by SUNAT: base adjustment, payment of omitted IR, interest and a fine of up to 50% of the tax.
• Unjustified patrimonial increase for the buyer if they pay "off the books" with non-bank money.
• Bancarización: payments above S/2,000 or US$500 must go through the financial system. Otherwise, you lose the right to use them as cost or expense and incur fines.
• The sale could be challenged by acción pauliana if it's done to defraud creditors or harm a spouse under sociedad de gananciales.

Cases where selling below market value makes sense

There are legitimate scenarios where the price drops with reason:

• Property with adverse possession in progress or invasions.
• Predio without a recorded declaratoria de fábrica: the buyer will face a costly procedure.
• Home with significant hidden or structural defects.
• Agreements during separation of patrimonies or succession.

In those cases, document everything: appraisals, expert reports, regularization budgets, partidas registrales and judicial decisions if any.

Practical example in Lima

Apartment in San Borja with a market value of S/650,000 and a declared autoavalúo of S/220,000. You agree to sell it for S/350,000 due to a family emergency:

• Alcabala (3% on the excess over 10 UIT): calculated on the greater of S/350,000 and the readjusted autoavalúo.
• Second-category IR: calculated on the gain (S/350,000 minus cost basis). If SUNAT considers the price well below market, it may demand adjustment to S/650,000 and charge the difference plus interest.
• Bancarización: the entire amount must be paid by transfer or nominative bank check.

Differences with donation and dación en pago

• Property donation: formalized by public deed and entails IR for the donor in some cases. The municipality charges Alcabala as in an onerous transfer.
• Dación en pago: when you hand over the property to extinguish a debt. The value must be the market one.
• Inheritance advance or legítima: taxed as a donation; worth evaluating if the deal is between parents and children.

How to protect yourself when selling below the autoavalúo

• Get a recent professional appraisal, ideally from a REPEV-registered expert.
• Keep evidence of the property's actual condition, prior offers and reasons for urgency.
• Bank 100% of the price. Don't accept large cash payments.
• Request a no-debt certificate for Predial and arbitrios and provide updated HR/PU.
• Have your accountant simulate second-category IR with the correct cost basis. Proper indexation legitimately reduces the tax base, with no need to underdeclare.

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