Does the Solidarity Tax in Spain Affect Your Property Investment?

Buying a luxury property in Spain comes with numerous advantages: quality of life, legal stability, privileged climate, capital appreciation... But it also requires being well informed about the tax obligations that may arise. One of the taxes that causes the most concern among high-level international buyers is the well-known solidarity tax in Spain, especially if the investment value exceeds three million euros.

At FM Properties, with over 30 years of experience on the Costa del Sol, we have advised dozens of clients on this issue. To help you better understand it, we spoke with our collaborator Cristina, a lawyer specializing in international tax law, who explained clearly what this tax is, who it affects, and how to reduce it legally.

What is the solidarity tax in Spain?

The solidarity tax on large fortunes is a state tax introduced in 2022 as a temporary measure to increase revenue from high-net-worth individuals. Although initially planned for two fiscal years, the tax remains in force in 2025.

This tax complements the existing Wealth Tax. However, it has a significant distinction: it is applied at the national level and cannot be reduced by regional governments, making it a real fiscal factor for many buyers—even in regions like Andalusia, where the Wealth Tax is fully discounted.

According to the Spanish Tax Agency, the solidarity tax applies to individuals whose net wealth in Spain exceeds €3,700,000. It follows a progressive structure:

• Between €3,700,000 and €5,347,998: 1.7%

• Between €5,347,998 and €10,695,996: 2.1%

• Over €10,695,996: 3.5%

This calculation is based on net wealth, meaning the value of assets minus applicable debts and liabilities.

Who is affected and how is it calculated?

This tax affects both tax residents in Spain and non-residents who own assets located in the country. For international buyers interested in luxury properties, this point is crucial: if you acquire a villa worth more than €3.7 million and take no specific action, you could be liable for the tax.

Wealth is assessed based on the value of assets held on December 31 of each fiscal year. For real estate, the applicable value is the highest of the following:

1. Cadastral value.

2. Value assessed by the tax authority.

3. Purchase price.

Therefore, even if you've recently purchased a property, the market value can significantly influence the tax if it exceeds the declared value.

What happens if the property is jointly owned?

A common way to mitigate the tax is to divide the ownership of the property between multiple individuals. Cristina explains it like this:

"If a property is owned by two people, such as a married couple, the value is split between them, reducing the net wealth attributable to each person."

Here's an example:
If you buy a property valued at €5 million and register it solely in your name, you would exceed the €3.7 million threshold and could be taxed. However, if you co-own it with your spouse, each of you would hold €2.5 million in net wealth and would be exempt.

This strategy is especially useful for couples looking to acquire a family residence or a joint investment and is fully legal as long as both parties genuinely hold ownership.

Tax strategy: mortgage as a reduction tool

Cristina also shared another very effective legal option: placing a mortgage on the acquired property.

"The outstanding mortgage amount is deducted from the property's value when calculating the solidarity tax. So even if you have liquidity, you can opt for a strategic mortgage," she notes.

This doesn’t mean you should take on unnecessary debt, but rather that partial financing could help you reduce your declared net wealth, possibly bringing you below the tax threshold.

This solution is common among buyers who wish to maximize fiscal efficiency without compromising on quality or location of the property.

What if you already exceed the threshold? Is it still worth buying?

Yes. The key lies in prior planning and proper advice. This tax should not be a deterrent, but just another factor to consider in your overall financial strategy.

Many of our international clients buy not only to live or invest, but also to obtain the Golden Visa, a residence permit for investors that does not require actual residence in Spain. You can learn more in this article from the Ministry of Foreign Affairs.

In addition, a good tax strategy allows you to integrate the cost of the tax into the expected return on the property, which can be high in the Costa del Sol, especially in exclusive areas where supply is limited.

Professional advice: an investment that avoids mistakes

At FM Properties.es, we work closely with lawyers and tax advisors who are highly experienced in international taxation. Our priority is to ensure that our clients:

• Understand their tax obligations from the start.

• Make decisions with legal certainty.

• Structure their purchase legally and efficiently.

• Benefit from a tailored tax strategy.

Not all buyers have the same profile, which is why we adapt every recommendation to the client’s country of residence, wealth structure, purchase objective (investment or residency), and family situation.

Practical tips if you’re considering a purchase

Before signing a reservation contract or making any transfer, we recommend:

1. Requesting a preliminary tax study with your legal advisor.

2. Assessing whether joint ownership is advisable.

3. Considering the possibility of strategic financing.

4. Checking if you are required to declare foreign assets in your home country.

5. Confirming whether the property falls under joint or individual taxation.

Transparency and planning will allow you to buy with peace of mind and confidence.

Conclusion

The solidarity tax in Spain is a reality for luxury property buyers, but it doesn’t have to become an obstacle. With proper guidance and strategic tax planning, you can legally reduce or even avoid its application.

Investing in Spain remains one of the best decisions for those seeking security, profitability, and quality of life. And at FM Properties.es, we’re here to ensure that investment is as efficient as it is rewarding.

Frequently Asked Questions (FAQ)

What is the minimum threshold for the solidarity tax in Spain?
€3,700,000 in net wealth held in Spain.

Does the tax also apply to non-residents?
Yes, as long as they own assets in Spain that exceed the threshold.

Can the tax be reduced through a mortgage?
Yes, the outstanding mortgage amount is deducted from the total declared value.

Can I register the property in the name of two people?
Yes, and it's a legal strategy to split the value and avoid the tax.

Is the solidarity tax still in effect in 2025?
Yes, although it was initially temporary, it remains applicable this year.

Would you like personalized assistance to structure your property purchase in Spain safely and tax-efficiently?
👉 Contact us here and speak with our expert team.