Many of our clients have asked us: What are the annual taxes and costs associated with owning a property in Spain?
Apart from the general maintenance costs, such as cleaning, repairing, utility bills, and so on, there are a number of costs in the form of taxes and fees that are associated to owning a property in Spain. Below you will find a list of applicable Spanish taxes and costs:
I.B.I . (Impuesto Bienes Inmuebles – Property Ownership Tax):
This is a local tax on the ownership of property in Spain, which one has to pay regardless of whether the owner is a resident or not. This is an annual tax charged by the local town hall and is at present a percentage of the valor catastral (cadastral value). This administrative value is usually lower than the market value, sometimes considerably so. Set by the town hall, it may vary depending on the municipality where the property is located. The tax scale goes from 0,3% to 1,3% of the cadastral value of the property. This value is extremely important because other taxes are based on it as well. When buying, you or your lawyer will need to see the seller´s last receipt for the IBI payment to check the value and to be able to calculate the exact amount of the tax.
I.R.N.R. (Impuesto sobre la Renta de No Residentes – Non Resident Property Income Tax):
The National Spanish Tax Authority (Agencia Tributaria) appoints all non-resident property owners who do not rent out their property and who do not have any other source of income in Spain (for instance, interest on a Spanish bank account) with imaginary income each year of 2% of the cadastral value of their property. This is subject to a 24,75% tax rate, however if your cadastral value has increased since 1994, the imaginary income is only 1.1%. The tax on a property with a cadastral value of 250.000 Euros would be as follows:
Property value for tax purposes = 250.000 €
Taxable base (2%) = 5.000 €
Tax (24,75%) = 1.237,5 €
If non-residents rent out their property and receive an income in exchange, they are obliged by law to declare this income and pay taxes on it. In this case, the rental income is subject to a 24,75% tax. During the period that the property is rented, the owner would not be liable for the Non-Resident Property Income Tax described above.
As an exceptional measure, the Spanish Government through Royal Decree-Law 13/2011, of September 16, has reinstated the Wealth tax, temporarily.
Spanish residents and non-resident will have to pay, for economic goods located in Spain, but only from 700.000 €. The tax payers affected by this tax are subject to a rate which ranges from 0,2% to 2,5% of the net asset value.
The net value is reduced by mortgage debt on the property. Tax residents in Spain may have additional benefits, depending on their individual circumstances.
Resident Income Tax:
Non-residents living more than 183 days a year in Spain are also considered residents for tax purposes, even if they have not obtained their residence permit. Spanish tax residents are subject to taxes that differ from those for non-residents. Since this is a brief explanatory guide about taxes after buying property in Spain mainly for non-residents, we are not going to cover complex subject of The Personal Income Tax (Impuesto sobre la renta de las personas físicas/IRPF).
We strongly recommend that if you would like to become a permanent tax resident in Spain, you receive qualified professional advice from a tax consultant.
Property owned by a non-resident company:
When the owner of the property is a non-resident company, a special tax has to be paid. The rate applicable is 3% of the cadastral value of the property.
Garbage collection tax:
Garbage collection tax is to be paid at the local tax office.
Home owners (residents or non-residents), who´s property is part of a development, building, or complex in which common zones are shared with other owners are by law obliged to be members of the Comunidad de Propietarios (Community of Owners). As such, this entails paying community fees for the upkeep of the communal areas.
* The information provided on this article is not intended to be legal advice, but merely conveys general information related to legal issues. The contents herein may be subject to errors, omissions and amendments.