With the arrival of the Income campaign, every year the same doubts and uncertainties arise about the Property Tax in Spain. A tribute that affects more than 200,000 taxpayers each year in our country. However, there are thousands and thousands of people who are still not sure who has to pay it, how it is calculated and how it is managed.
¿Qué es el impuesto sobre el patrimonio?
The wealth tax (IP) is a general, direct and personal tax.
Taxes the property or possession of the patrimony, falling on its net value. In other words, it is a strictly individual tribute/tax that falls on individuals and is complementary to personal income tax. It is applied only to people’s assets, not to their annual income or economic transactions.
The IP is, in turn, one of the most special tax duties of the Spanish Treasury. Abolished in 2008, this tax was reinstated in 2011. And to date, it is paid every year.
It is also sometimes known as a tax on wealth or on the rich.
Spain is one of the few countries, along with France, Switzerland, Norway or the Netherlands (they have similar taxes), that levies this tax.
Frequently asked questions about the Wealth Tax
How is the tax and who regulates it?
The Wealth Tax law is state, so it is a tax regulated and established by the State. However, for years it has been ceded to the Autonomous Communities, which are the ones in charge of managing and collecting it.
Who does the wealth tax affect?
The wealth tax only affects natural persons, never legal entities. It is, as we said before, an individual tax, so it does not affect the situation of marriage under community property.
This tax must be paid by:
- Residents in Spain, affecting all assets and rights that each person possesses, including properties abroad.
- Non-residents in Spain (including foreigners) as long as they have assets or rights in Spain. In this case, the tax only affects assets and rights that are within Spanish territory.
Do I have to pay wealth tax?
This is the million dollar question, the one that thousands of people ask each time the income campaign arrives. Well, it is on the same dates as the Income Tax Declaration when you have to present the Form 174 of the Wealth Tax online.
A priori, everyone is subject to this tax. But at the moment of truth, there are a few people who have to pay this tribute. Precisely, the ones that have the most heritage.
Los dos criterios que sigue Hacienda para determinar quiénes deben hacer el Impuesto sobre el Patrimonio son:
- That the result comes out to pay once the deductions and allowances have been applied. That is, those who have a patrimony greater than the exempt minimum.
- That the value of the assets and rights exceeds two million euros, even if a negative result comes out.
4 exemptions in the assets and rights of your net worth
- If your habitual residence has a value of up to €300,000.
- If your net worth does not exceed €700,000 in general. In addition, from said calculation you must exclude up to 300,000 euros of the value of your habitual residence in general, although there are autonomous communities that apply a different limit.
- Family businesses (business or professional).
- There are elements that are not taken into account when calculating your tax base, such as household goods, certain investments (pension plans, etc.), business and professional assets, and certain works of art and antiques.
Autonomous regulations
The CCAAs, having ceded the Wealth Tax, can apply reductions in the exempt minimum, modify the rate and create exemptions for protected assets for the disabled. The most famous bonus is that of Madrid, which bonuses 100% in all possible cases. In Madrid you do not pay wealth tax.
It is important to know that the regional regulations where they live apply to residents. And non-residents are subject to the regional regulations of where most of the assets are located.
On the other hand, in the Basque Country and Navarra, the Foral Communities are the local Treasuries that are in charge of establishing said tax.
How is the Wealth Tax calculated?
The value of your net worth is the set of assets and rights that you own, once charges and personal debts are subtracted.
Thus, to calculate the Wealth Tax, the first thing is to add all the assets and rights of the person in question. Then, we subtract 300,000 euros in the case of habitual residence and debts. Once we obtain this net worth, we subtract it from the exempt minimum, which is 700,000 euros (varies depending on each CCAA). And on that tax base, the calculation of the tax to be paid will be made, which goes by sections, from 0.2% to 3.5%. Finally, deductions, reductions and allowances will be applied until the full amount to be paid is obtained.
It should be noted that the valuation of the home for the wealth tax is always the maximum between the purchase value of the home, the cadastral value and the value verified by the Administration for the purposes of other taxes.
How much do I have to pay for estate tax?
Being a tribute transferred to the Autonomous Communities, the exact amount to pay for the wealth tax changes according to each autonomous community.
As a general rule, the percentage to be applied to your net worth ranges between 0.2% and 2.5%, in general. Everything will depend on the bonuses that modify the fee.
An amount that, on the other hand, has changed in 2021 as part of the general tax increase that also affects personal income tax. Specifically, the maximum marginal rate has increased by one point, from 2.5% in 2020 to 3.5%.
Changes in wealth tax in 2022
After being modified in 2021, the wealth tax will be more expensive on properties acquired in 2022.
The main affected will be the owners of autonomous communities in which this tax is not subsidized who buy a home from January 2022. The reason? That the apartments must be valued according to the new Reference Value of the Cadastre, which will force the taxpayer to pay more for the properties acquired from the first month of 2022.
