We were encouraged by your advice in an earlier column that we should not be paying Spanish wealth tax after paying it for many years. However our tax consultant tells us that we are still required to pay these taxes every year. We have paid again this year as we were unsure on conflicting views. We own a property in Spain and use it for holidays. Could you offer any clarification on wealth tax?
Perhaps you are confusing wealth tax with other taxes. A non-resident property owner is liable for three taxes on his Spanish property.
- The Impuesto sobre Bienes Inmuebles. This IBI is the annual municipal real estate tax, often known as the “rates”.
- The non-resident property owner’s imputed income tax. A small percentage of your value is attributed to you as imaginary income and you are then charged a real tax of 19 per cent.
- Finally, there is the Impuesto sobre el Patrimonio, or wealth tax. If your property is in Andalusia, you have an exemption of €700,000. If you and your wife each own half of your property, you have 1.4 million euros of exemption.