Wealth tax valuation of foreign property

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Paddy Pumpkin
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Wealth tax valuation of foreign property

Postby Paddy Pumpkin » Thu May 04, 2017 2:16 pm

Does anyone know how the hacienda values a foreign property since cadastral values are not applicable?

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Flexo
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Re: Wealth tax valuation of foreign property

Postby Flexo » Thu May 04, 2017 3:40 pm

With foreign you mean like not in Spain?

El Cid
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Re: Wealth tax valuation of foreign property

Postby El Cid » Thu May 04, 2017 3:58 pm

What do you need the information for?

Sid

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Re: Wealth tax valuation of foreign property

Postby Paddy Pumpkin » Thu May 04, 2017 4:55 pm

Hi Sid

I am looking at my potential exposure to wealth tax if I moved to Spain.

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Re: Wealth tax valuation of foreign property

Postby Paddy Pumpkin » Thu May 04, 2017 5:05 pm

Flexo wrote:With foreign you mean like not in Spain?

Yes outside Spain

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Re: Wealth tax valuation of foreign property

Postby Paddy Pumpkin » Thu May 04, 2017 5:10 pm

El Cid wrote:What do you need the information for?

Sid
Calculation potential wealth tax exposure if I move to Spain
As I understand it Real estate is valued on the basis of the highest of the following values: the cadastral value, the market value as assessed by the tax authorities, or the purchase price as listed in the title deed. The highest of these three values is the value that will be taken into consideration for valuing your assets.

How will the tax authorities assess the value of property outside Spain?

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Re: Wealth tax valuation of foreign property

Postby El Cid » Thu May 04, 2017 6:17 pm

50% of the purchase price.

Sid

Correction. The 50% reduction applies to imputed rental income tax on a foreign property. For asset declaration and wealth tax it is the original purchase price.

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Re: Wealth tax valuation of foreign property

Postby Paddy Pumpkin » Thu May 04, 2017 8:21 pm

So if I purchase Uk property I reduce my wealth by 50% in the eyes of the Spanish Tax man...great news...Thanks

On the same subject maybe you also know the answer to the following

I have read the following on many sources, but I don't fully understand it

The Spanish tax regulations state that wealth and income taxes added together cannot exceed 60% of a resident’s total “general and savings” taxable income. If it does the wealth tax is reduced, subject to paying a minimum of 20% of the full wealth tax calculation.

Given say a wealth tax liability of 10k and Savings income of 30k and no other income. Is the 60% ratio measured against the tax due on savings income ( about 7k) is it measured against the 30k actual income (18k) ?

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Re: Wealth tax valuation of foreign property

Postby El Cid » Thu May 04, 2017 10:12 pm

Sorry, I have no idea as I don't know anyone wealthy enough to pay wealth tax!

This might help https://www.spanishpropertyinsight.com/tax-and-pensions/spanish-wealth-tax-patrimonio/

Sid

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Re: Wealth tax valuation of foreign property

Postby wollie » Fri May 05, 2017 8:36 am

If we move to Spain we need to list all of our interests and the income from Spain, i assume the value of a property be at the local value of where the property is located as this is the actual market value of same.
Considering the income cut off rate before tax is paid be considerably lower in Spain the income tax from say rent will kick in earlier.
You may also need to consider that 100+ countries have already signed up to the sharing of interest accrued in accounts around the world.
I assume just giving the interest accrued makes it legal as nothing about your actual account is being disclosed but the amount of interest could have possibly raise questions.


Spanish wealth tax

Wealth tax in Spain is payable on the value of your assets on the 31 December each year. Although wealth tax was abolished in Spain in 2009, it was reintroduced in 2012 and 2013, and from 2015. Although there are calls to abolish weath tax again, the government reconfirmed it will continue in 2017. If your wealth is more than EUR 700,000 you will be liable for wealth tax of 0.2–2.5 percent on net assets, although variations exist within regions: residents pay tax on world-wide assets, while non-residents pay Spanish assets only.

hope this helps

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Re: Wealth tax valuation of foreign property

Postby Wicksey » Fri May 05, 2017 8:52 am

On the 720 form to declare your assets abroad they only wanted the purchase price of the property owned, not a current value. Also some things like rental income and annuities only are taxed on a proportion of the total (I think rental was something like 40% of the net profit) so it's difficult to quickly calculate whether, or what, income tax you may pay.

Civil service pensions received are also taken into account when calculating how much tax you may pay in Spain .... I find the Spanish system a lot harder to fathom than the UK one where the tax free allowances are far more generous and I know we'll definitely not be paying tax there :).

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Re: Wealth tax valuation of foreign property

Postby Paddy Pumpkin » Fri May 05, 2017 9:17 am

Thanks. We own some properies which were purchased many years ago. If we take their present value I get a chunky wealth tax bill. If we take their purchase price I get no bill....makes a big difference. The income tax part I understand and really like the 60% reduction, although I understood you can't reduce expenses so it's on the gross rent (although open to correction on this)

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Re: Wealth tax valuation of foreign property

Postby Paddy Pumpkin » Fri May 05, 2017 9:20 am

wollie wrote:If we move to Spain we need to list all of our interests and the income from Spain, i assume the value of a property be at the local value of where the property is located as this is the actual market value of same.
Considering the income cut off rate before tax is paid be considerably lower in Spain the income tax from say rent will kick in earlier.
You may also need to consider that 100+ countries have already signed up to the sharing of interest accrued in accounts around the world.
I assume just giving the interest accrued makes it legal as nothing about your actual account is being disclosed but the amount of interest could have possibly raise questions.


Spanish wealth tax

Wealth tax in Spain is payable on the value of your assets on the 31 December each year. Although wealth tax was abolished in Spain in 2009, it was reintroduced in 2012 and 2013, and from 2015. Although there are calls to abolish weath tax again, the government reconfirmed it will continue in 2017. If your wealth is more than EUR 700,000 you will be liable for wealth tax of 0.2–2.5 percent on net assets, although variations exist within regions: residents pay tax on world-wide assets, while non-residents pay Spanish assets only.

hope this helps
I guess I need to go and see a tax abogado....I just can't risk that the value assumption is wrong. I need to know for sure how they will value my properties when they calculate wealth tax


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