What is wealth tax in Spain and who must pay it?

Inheritance and Gift Tax in Spain

As with Wealth Tax, you will have to pay Inheritance and Gift Tax whether you are a resident or non-resident. The Wealth Tax is paid to the autonomous communities, some of which apply a series of allowances so that, in practice, you pay a symbolic amount.

If you are a non-resident, you must file form 650 for inheritances and form 651 for donations. The taxable base of the tax is made up of the actual value of the assets acquired minus deductible debts and charges, including mortgages.

Mortgage to save property taxes in Spain

Both in the case of Wealth Tax and Inheritance and Gift Tax, you will only have to pay tax on your net assets.

In the case of real estate, the value of the property is reduced by the mortgage, as long as the mortgage is in place at the time of purchase and is directly associated to the purchase of your home. By mortgaging you can save substantial funds, especially if we consider the tax deductions together with the current low interest rates and how you can optimize your investment by mortgaging the maximum amount and maintaining liquidity to invest in other areas with higher returns.

For this reason, at Lionsgate Capital we recommend financing the maximum amount when buying a property in Spain, as it makes sense to benefit from the advantages of financing whilst continuing to make money with your money!