1. Real estate
Regulations: Art. 10 Wealth Tax Law
Real estate, both urban and rural, must be valued for the Wealth Tax in accordance with the following rules:
General rule of valuation
Real estate of an urban or rural nature will be computed taking as a reference the highest value of the following three:
- The cadastral value stated on the 2020 receipt for the Real Estate Tax.
- The value verified by the Administration for the purposes of other taxes , such as, for example, the Tax on Property Transfers and Documented Legal Acts or the Inheritance and Gift Tax.
- The price, consideration or acquisition value . In relation to these terms, it should be noted that the price refers to sales transactions, the consideration to exchanges and the acquisition value to cases of inheritance or donations.
Special valuation rules
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Properties that are leased as of December 31, 2020
Leased urban properties will be valued in accordance with the general rule discussed above.
However, homes and business premises leased under contracts entered into before May 9, 1985 will be valued by capitalizing the income accrued in fiscal year 2020 at 4% , provided that the result is lower than that which would result from the application of the general rule for the valuation of real estate.
See in this regard the second and third transitional provisions of Law 29/1994, of November 24, on Urban Leases ( BOE of the 25th).
For these purposes, the following formula can be used to calculate the capitalization of income:
Computable value = Accrued income x (100 ÷ 4)
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Properties under construction
Properties that are in the construction phase will be valued by the amounts that have actually been invested in said construction up to the date of the tax accrual (December 31). The corresponding asset value of the land must also be taken into account.
In the case of horizontal property, the proportional part of the value of the land will be determined according to the percentage set out in the title.
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Properties acquired under a timeshare regime
The right to timeshare use of real estate grants its owner the right to enjoy, exclusively, for a specific period of each year, consecutive or alternate, accommodation that can be used independently because it has its own exit to the public road or to a common element of the building in which it is integrated and that is permanently equipped with the appropriate furniture for this purpose, as well as the right to the provision of complementary services.
This right, which is currently regulated by Title II of Law 4/2012, of July 6, on contracts for the time-share use of tourist goods, the acquisition of long-term vacation products, resale and exchange and tax regulations ( BOE of 7), may be constituted as a limited real right or as an obligatory right (in this case, as a contract for the lease of real estate for seasonal vacations) and is valued, whatever its nature (real or obligatory), by the purchase price of the certificates or other securities representing them.
Note: Please note that, regardless of whether the rights to timeshare use of real estate must be valued at their purchase price, when it is a real right it must be declared in section “M” (Real rights of use and enjoyment) of form D-714 of the Wealth Tax, and when it is obligatory in section “Q” (Other assets and rights of economic content) of the aforementioned form.
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Right of bare ownership over real estate
The value of the right of bare ownership, will be computed by the difference between the total value of the property and the value of the usufruct that has been established on it . In the event that the real right that falls on the property is a life usufruct that is also temporary, the bare ownership will be valued by applying, among the rules for valuing usufruct, that which attributes the lowest value to the bare ownership.
To determine the value of the usufruct established on the property, see the valuation rules contained in the section relating to " Real rights of use and enjoyment (excluding those which, where applicable, fall on the habitual residence of the taxpayer)." of this same Chapter.