With the 2017 State Budget for it was created a new property tax, which is called Additional to the IMI. This new tax replaces the Stamp Duty Tax, which was in force until 2016 and was levied on the tax value of each property for housing Above EUR 1 million.
The main difference between this new tax and the previous one, is that the taxation will focus on the owner (and the value of his assets) instead of the individual value of each property. In other words, in the past you were only taxed if you owned a property that was worth over 1 million Euros, now it is the combined value of all the properties and the amount is lower (starts at 600.000€).
- What is the additional to IMI?
It is a tax that is levied on the sum of the assets of residential real estate, owned by individuals and companies, with a value of more than 600,000 euros, and which is added to the IMI.
Please note that the value considered for tax purposes, is the value registered at the tax office, which in most cases is lower than the market value or the purchase price.
Real estate classified as “commercial, industrial or service” is excluded from this tax.
- Who pays for what?
Individuals will be subject to the AIMI whenever the sum of the Property Tax Value of all their properties exceeds 600,000 euros, regardless of the individual value of each. Thus, the AIMI rate to be applied will be as follows:
– exempt up to 600 thousand euros
– 0.7% on the value exceeding 600,000 euros, up to 1,000,000 euros;
– 1% on the value exceeding 1,000,000 euros;
If taxpayers are married or living together, they may opt for joint taxation. In this situation, the AIMI rates to be paid are the following:
- Exempt until 1.2 million euros
- 7% on the value exceeding 1.2M up to 2 million euros
- 1% on the aggregate equity value that exceeds the 2,000,000 euros
- If a taxpayer has five properties with a total tax value of 800.000 euros. The value clears up as follows:
(800 thousand euros – 600 thousand euros) x 0.7% = 1.400 euros
- If the taxpayer has five properties with a total tax value of 1.3M euros, the value clears up as follows:
(1 M euros – 600 thousand Euros) x 0.7% = 2.800 euros plus
(1.3M euros – 1M euros) x 1% = 3.000 euros
Total AIMI to pay, 5.800€
Companies will also be subject to the payment of the AIMI on the entire Tax Value of the residential buildings owned, or where they have the usufruct. This leaves a large part of the real estate assets of companies exempt.
The AIMI will also apply to properties belonging to undivided inheritance, in cases where the heirs have not yet shared assets.
- What are the advantages of joint taxation?
As mentioned above, taxpayers who are married or living together, may opt for joint taxation of the IMI surcharge. In this way, they will only be subject to the payment of this tax when the total of the patrimonial value taxed exceeds 1,200,000 euros.
In some cases, this could be the difference between paying or not paying this tax. Please see the following example: a person with a property portfolio worth 800,000 euros, will pay 1,400 euros of AIMI. However, if the holder of the house is married and opt for joint taxation, it will not pay this tax as it will be exempt up to the amount of 1.2M euros.
- When do I decide for joint or single taxation?
If you are the single owner or the properties, but are married and or living together with your partner, you may opt for the joint taxation. This option needs to be fulfilled at the tax portal, between the 1st of April and the 31st of May.
Please note that it’s important that you verify if the asset is registered in joint names at the tax office. In the past, it was frequent that the assets where only registered in one name, despite they were owned by both. Hence this communication is more important, as it could be the difference between paying or not the AIMI tax.
- When will you have to pay it?
This tax will be paid each year in one single instalment in September. The tax will be based on the property tax values of the buildings and their owners, on the first day of the year. So, this means that if you owned the property in 1st anuary, you will still have to pay this tax, even if you already sold it since then.
- Is it possible to deduct this tax from the IRS?
Yes, if you receive rental income the AIMI tax will be deducted on your IRS. This will be considered to landlords who are taxed by category F, and choose to be covered, or who are taxed by category B. It should also be noted that this deduction is not included in the overall deduction limit.
If you would like to know whether you are liable for AIMI or if you have any other tax questions, please feel free to contact us. Send us an email or pass by our office and book an appointment to discuss your personal situation.