Properties under construction: when does the reporting obligation arise?
The Directorate General of Taxes (DGT) has issued a relevant ruling for tax residents in Spain who make real estate investments outside national territory, especially in projects that are in the initial stages of development.
What the DGT has ruled
The inquiry focused on determining whether there is an obligation to file the annual informative declaration on assets and rights located abroad when the property being invested in has not yet been delivered to the buyer. The administration has ruled that the obligation to report arises at the moment the subject acquires ownership of the assets or the rights over them.
In the specific case analyzed, since the property is under construction and its delivery is a future event, the taxpayer does not yet hold ownership of the asset. Consequently, the obligation to file said informative declaration does not occur until the acquisition of ownership of the property is formalized.
What this means for you
This ruling has a direct application for natural persons residing in Spain who make payments or economic commitments for housing abroad that is not yet completed. If you are making disbursements for a property under construction, but are not legally the owner of the asset, you are not obligated to include said asset in the informative declaration of assets abroad.
It is fundamental to distinguish between the commitment to purchase or the payments made and the effective ownership of the right to the property, as it is this latter milestone that triggers the duty to report to the Tax Agency (AEAT).
What you should do
In the event of this type of investment, it is necessary to monitor the exact moment when the transfer of ownership or the right to the asset occurs. The applicable regulations, set out in Royal Decree 1065/2007 (RGAT) and Law 58/2003 General Tax Law, link the duty to report to the status of owner. It is recommended to assess each particular situation to determine the precise moment the reporting obligation arises and to ensure regulatory compliance.
Frequently asked questions
- Must I declare a property abroad if I have already made payments but it is under construction?
- No, if ownership of the asset has not yet been acquired, the obligation to file the informative declaration does not arise.
- At what moment does the obligation to file the informative declaration arise?
- The obligation arises at the moment the subject becomes the owner of the assets or the rights over real estate located abroad.