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:

1. The cadastral value stated on the 2023 receipt for the Real Estate Tax.

2. The value determined or 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 Tax on Inheritances and Donations.

   Note: With effect from 11 July 2021, the rules for the valuation of real estate were amended to add as a value to be taken into account the value "determined" by the Administration for the purposes of other taxes, which meant incorporating as a valuation criterion for real estate the reference value provided for in the consolidated text of the Real Estate Cadastre Law, approved by Royal Legislative Decree 1/2004, of 5 March.

   This reference value is determined by the General Directorate of Cadastre, objectively and with the limit of the market value, based on the data in the Cadastre, as a result of the analysis of the prices reported by public notaries in real estate sales carried out.

   However, the reference value will only affect properties acquired after January 1, 2022, when said value has been taken as a tax base in the tax that taxes its acquisition (that is, in the Tax on Property Transfers and Documented Legal Acts or in the Tax on Inheritances and Donations).

   These individual reference values will be available on the Cadastre's electronic headquarters. The aforementioned office will also offer the possibility of consulting and certifying the reference value of a property on a given date.

3. The price, consideration or acquisition value .

   Within the " acquisition value" referred to in article 10.One of the Law of Tax on the Assets , the "expenses and taxes inherent to the transfer" that have been paid by the purchaser must be included. These are expenses and taxes “linked by their nature or inseparable” from the transfer as such. An example of the first would be the notary and registration expenses and, of the second, the Tax on Inheritances and Donations, the Tax on the Added Value (VAT) or the Tax on Onerous Asset Transfers and Documented Legal Acts (ITPAJD), as the case may be.

   On the contrary, to determine the value of real estate in the Wealth Tax, in accordance with the rule provided for in article 10. One of the Wealth Tax Law, said value cannot be reduced by the amount of amortizations made within the scope of IRPF .

Special valuation rules

1. Properties that are leased as of December 31, 2023

   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 2023 at 4 percent, provided that the result is lower than that which would result from applying 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 November 25).

   For these purposes, the following formula can be used to calculate the capitalization of income:

   Computable value = Accrued income x (100 ÷ 4)

2. 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 accrual of the Tax (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.

3. 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 July 7), may be constituted as a limited real right or as an obligatory right (in this case, as a contract for the lease of seasonal vacation real estate) 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.

4. 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, the one that 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.