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TAXES YOU PAY EVERY YEAR

All non-resident property owners are liable to annual taxes on their property. Using either the valor catastral or the value in the escritura pública whichever is higher.

1) Patrimonio (wealth tax)
2) IRPF (property owners income tax)
3) I.B.I. "Impuesto sobre Bienes Inmuebles" (the annual real estate tax)

Form 214 is what you want to remember, if you are a non-resident property owner. Each year the non-resident property owner is liable for two Spanish estate taxes on his ownership.

Patrimonio
This is a tax on capital assets. Residents have an exemption on the first 26 million pesetas of valuation for their principal home, but non-residents have no exemption and must pay.

IRPF
Even if you do not let your property, you are still committed to declare and pay tax at 25% of the amount resulting from calculating 2% of the rateable value of the property (see an example below).

Non-resident property owner's imputed income tax. Even if you do not let your property, you are still committed to declare and pay tax at a rate 25% of 2% of the rateable value of the property every year (see an example below).

You file each year for these two taxes on Form 214. If you neglect to do this, the Spanish Tax Agency will catch up with you when you go to sell the property, and you will be charged for the preceding four years. On a property valued at 20 million pesetas, the two taxes together should cost you about 140,000 pesetas a year.

IBI
You have to pay your municipal real estate tax, the IBI, which you pay every year to your town hall. This varies widely, according to the municipality and the worth of your property. It is based on that famous "valor catastral".

If you are a non-resident in Spain for tax purposes, you will be taxed on any income arising from a Spanish source. If you let your property in Spain, the income arising will normally be charged at 25% as Income tax.

The IBI will show the Valor Catastral (rateable value). This is the official assessed value of the property. (Your legal representative should ensure that there are no debts due from previous years).

The local authority will annually levy this tax on your property, the rate being around 0.7% of the rateable value of the property - but it can slightly vary depending on the municipality.

NIF (Tax Registration Number

All property owners in Spain, whether resident or not, must obtain this number from their local tax administration office. As you will not able to pay your taxes or register your property without it. It is simply a fiscal ID number for non-residents. You also need it for payment of your annual taxes to Hacienda. Again your legal representative will advise you on this matter.

IRPF (property owners income tax) is calculated from the base of 2% of the Valor Catastral (this 2% is considered to be your income on the property) and you pay on this imaginary income the rate of 25%. For example, a non-resident with a property with a Valor Catastral of 7 million PTAs the bill would be 35,000 pesetas. per annum ( 7.000.000 PTAs @2% = 140.000 pesetas @ 25%= 35.000 pesetas)

Note : the Valor Catastral is normally much lower than the real value of the property. The owner of the property on the 31/12 of the year is liable for the payment of these taxes. E.g. 1998 tax is due any time from Jan'99 to Dec.99. Payable in hacienda office. The first year you purchase you are only liable for the proportionate amount.

You have to pay "Patrimonio" (wealth tax) paid annually, it is calculated upon the value declared in the deeds and charged at the rate of .002% on base of up to 25 million pesetas. On 15 million pesetas you pay a yearly rate of 30,000 pesetas, however a resident has exemption on the first 17 million pesetas.

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