With reference to your advice regarding property wealth tax. We have owned a property in Torrevieja for 18 years but have only paid tax on it for four years. The property is now valued at €50,000. We are non-residents. If we start to pay tax now, will we open a can of worms and what would be the worst-case scenario?
D.C. (Costa Blanca)
There is no ‘property wealth tax.’ 1. There is an annual property tax, the IBI (Impuesto sobre Bienes Inmuebles), which is the equivalent of the ‘rates’ in the UK. You pay this tax every year, based on the rated value of your property. In your case, it should not be more than a few hundred euros. 2. Then there is the Spanish ‘wealth tax,’ the Impuesto sobre el Patrimonio. This is a tax on all capital assets, not only houses and flats. It includes stocks and shares, money in bank accounts, yachts and gold bars under the mattress. Even non-residents have an exemption of €700,000 per person, so you probably are exempt. If you have not paid the IBI, the Tax Agency can claim back tax on the previous four years.