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V1244-17 22 May 2017 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · obligación real

Only debts located in or due to be fulfilled in Spain may be deducted from the taxable base

A taxpayer inquired whether, following the death of a non-resident owner, the value of a property in Spain could be reduced by a loan taken out after its acquisition. The DGT ruled that, as the heirs are non-residents, only those debts considered to be located in or due to be fulfilled within Spanish territory are deductible.

The question raised

Whether, in the event of the death of the owner, the value of the real estate could be reduced by the amount of the loan in the taxable base of the Inheritance and Gift Tax to be paid by the children and heirs, even if the loan was subsequent to the acquisition of the real estate.

The DGT's ruling

Non-resident taxpayers are subject to taxation by real obligation on assets located in Spain. To determine the taxable base, only those debts considered to be located or to be fulfilled in Spanish territory and which are duly justified shall be deductible. The justification of the debt must comply with the evidentiary requirements demanded by Spanish Law.

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