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Practical Heritage Manual 2021.

Deductible debts

Regulations: Art. 25 Wealth Tax Law

Deductible debts

Charges and encumbrances of a real nature that reduce the value of the respective assets or rights, as well as debts and personal obligations for which the taxpayer must be responsible, are considered deductible debts in the Wealth Tax.

Debts will only be deductible when they are duly justified, without interest being deductible in any case.

Debts will be valued at their nominal value on the date of tax accrual (December 31).

Non-deductible debts

The following will not be subject to deduction:

  1. The guaranteed amounts, until the guarantor is obliged to pay the debt, because the right has been exercised against the main debtor and it has failed. In case of joint obligation, the guaranteed amounts cannot be deducted until the right is exercised against the guarantor.

  2. The mortgage that guarantees the deferred price in the acquisition of an asset, without prejudice to whether the deferred price or guaranteed debt is.

  3. The charges and encumbrances that correspond to goods exempt from this tax, nor the debts incurred for their acquisition.

    When the exemption is partial, as occurs in cases in which the value of the habitual residence is greater than 300,000 euros, the proportional part of the debts that corresponds to the non-exempt part of the asset or right will be deductible, where applicable. concerned. 

Special case: debts related to assets and rights affected

The inclusion of these debts along with the remaining deductible debts will only apply when the following circumstances occur:

  • When the assets used for business and professional activities are not exempt from the Wealth Tax.

  • When the taxable person does not keep accounting in accordance with the Commercial Code.

Note: In cases of real obligation to contribute, only the charges and encumbrances that affect the assets and rights that reside in Spanish territory or that can be exercised or have to be fulfilled therein will be deductible, as well as debts for capital invested in the indicated assets. .