Beatriz Salgado came back to Valladolid in 2024 after twelve years in Mexico. She left behind a house in Querétaro that she bought in 2016 for 2,400,000 pesos, plus about 180,000 pesos in taxes, notary and registry fees. In 2020 she also inherited from her father a flat in Buenos Aires for which nobody ever paid a price, and whose value nobody has worked out since. Today the Querétaro house would be worth almost twice as much. When preparing her first Modelo 720, the Spanish return on assets held abroad, Beatriz had three questions: current value or purchase value? Which exchange rate? And what do I put for the inherited flat?
The value the Regulations ask for: acquisition value
Article 54 bis of the Reglamento General de Gestión e Inspección (Royal Decree 1065/2007, the regulations on tax management and inspection) lists the information to be given for each property: its identification and type, its location (country, town, street and number), the date of acquisition and the acquisition value. It does not ask for the market value, nor a valuation, nor the tax value the property has in its own country.
That acquisition value is also the one used to see whether the 50,000 € threshold is exceeded. That is why a flat bought cheaply decades ago may not create an obligation even if it is worth a lot today, while one bought at a high price last year creates one from the first tax year.
The Agencia Tributaria, the Spanish tax agency, specifies in its frequently asked questions on the form that the acquisition value includes the costs inherent in the purchase and the taxes. It is not just the price in the deed.
The Querétaro house, step by step
The Agency also sets which exchange rate applies: the one in force on 31 December of the tax year to which the return relates. Beatriz is filing for the first time with the figures for 2024, so she uses the rate on that date. With an assumed rate of 21.50 pesos to the euro:
| Item | Pesos | Euros |
|---|---|---|
| Purchase price (2016) | 2,400,000 | |
| Taxes, notary and registry | 180,000 | |
| Total acquisition value | 2,580,000 | |
| Conversion at the rate on 31-12-2024 (21.50) | 120,000 € |
Beatriz declares the house at 120,000 €, with 2016 as the date of acquisition. The fact that the rate in 2016 was different does not matter for the 720; it will matter, and a great deal, on the day she sells and works out her gain for income tax (IRPF), where the rules are different.
What happens to the exchange rate afterwards is subject to a specific rule for real estate: once the acquisition value has been fixed in euros, later movements in the rate do not count when checking whether the block has grown by more than 20,000 € and the form has to be filed again. For accounts and securities they do count. It is one of the few asymmetries in the form, and it saves pointless filings for people with property in volatile currencies.
The inherited flat: real value on the date of acquisition
For property received by inheritance or gift, the Agency's answer is that the acquisition value to enter is understood as the real value of the asset at the time it was acquired. There is no price, but there is a value, and it has to be documented.
In practice, Beatriz has three possible sources, in order of strength:
- the value assigned to the flat in the division or allocation of the estate, if there is a document recording it;
- a retrospective valuation as at the date of acquisition, carried out by a professional in that country;
- documented market references from that date for comparable properties.
The date of acquisition in an inheritance deserves a note. The Agency states that heirs are obliged to report from the moment the inheritance has been accepted, expressly or tacitly. Which specific date is entered as the acquisition date, and what effects acceptance has under the law governing the succession, are questions that must be confirmed by a professional there if the succession is governed by another country's law.
Let us assume that the allocation of the estate in Argentina set a value equivalent to 68,000 €. Beatriz's real estate block then looks like this:
- house in Querétaro: 120,000 €;
- flat in Buenos Aires: 68,000 €;
- total for the block: 188,000 €; both are declared.
That acquisition value is declared once and serves as the reference for years. If it is arbitrary, it will be arbitrary in every later check too. Keeping the document that supports it (the deed with its costs, the allocation of the estate, the valuation) is part of the return, even though it is not attached.
If you have property abroad and are not sure what value applies, in the Modelo 720 form you can tell us how you acquired it and what documents you have kept; with that we decide which figure can be defended.
Other situations with their own rules
| Situation | Value declared | Source |
|---|---|---|
| Purchase in parts on different dates | Your own share grossed up to 100 % is used for the threshold | Agency criteria |
| Bare ownership later consolidated | Date of consolidation and total value (initial right plus consolidation) | Agency criteria |
| Usufruct or bare ownership | Date of acquisition and value on 31 December under wealth tax rules | Art. 54 bis.4 |
| Timeshare or rotational use | Date of acquisition and value on 31 December under wealth tax rules | Art. 54 bis.3 |
| Payments on account before the deed | Not declared until you hold title | Agency criteria |
| Sale of a property already declared | In addition, value and date of transfer | Art. 54 bis.5 |
The first row deserves an example, because it is surprising: had Beatriz bought only 50 % of the house for 1,290,000 pesos (60,000 € at the rate in the example), the threshold would be checked against 120,000 €, that is, her share grossed up to the whole. That is how the Agency resolves it, which means that two co-owners of the same property can reach different conclusions if they bought at different times and at different prices.
The 720 value is not the wealth tax value
If Beatriz is liable to the Impuesto sobre el Patrimonio (Spanish wealth tax), the property does not go in at the same value there. Article 10 of that law takes the highest of several values (the cadastral value, the value established by the tax authorities for other taxes, or the acquisition value), and for a property abroad applying those rules requires its own analysis. The comparison between the two is in what is the relationship between the 720 and wealth tax? and in the guide on valuing assets for wealth tax. For inheritances with assets in several countries, the guide on valuing assets in an inheritance completes the picture.
Residents with property in their home country, bought or inherited, are one of the most frequent cases at Salama Tax; that page explains how we document the acquisition value before filing.