Reasons to get a mortgage in Spain
There are financial reasons, particularly for real estate above a certain threshold, where you often have to pay wealth tax annually.
The wealth tax is more than twice as high in some parts of Spain as it is in other parts because each autonomy may use different exemptions and deductions, establish various tax rates or completely avoid the application of the tax, as is the case with the wealth tax in the Communities of Madrid or Andalucía, where there is a 100% bonus deduction for this tax.
Just like Wealth Tax, whether you are a resident or a non-resident, you will have to pay Inheritance and Gift Tax. The taxable assets for these taxes are the actual worth of the assets minus deductible debts and expenses, such as mortgages.
Given that mortgages are seen as a loan and lower the taxpayer’s net worth, they can be used to lower both the wealth tax and the inheritance tax. Because of this, getting a mortgage to buy a property in Spain provides advantages when it comes to taxes.
Maintaining liquidity and not locking your money up in one asset makes sense while investing your money in other sectors that produce higher returns. Diversifying your investments across a variety of asset classes is advised by experts to reduce portfolio risk.