Real Estate Spain - Main Annual Taxes Spain
if you are not resident in Spain, then you must pay Wealth Tax, (Patrimonio) on all your assets situated in Spain. Assets include your house, bank account and other assets with a defined value (eg stocks and shares).
How The Wealth Tax is Calculated
The value of your house is the official estimate that appears in your receipt for LOCAL RATES, and it is called VALOR CATASTRAL. If you are not yet registered as a rate payer, then the value used will be the value declared in the Escritura.
Wealth Tax has to be paid each year but it is allowed (about 0.2%) of the total value of your assets. Your have to bear in mind that 3% more, in respect of furniture, will be added to the assets value. However, this must be paid in order to prevent any problems when the time comes for you to sell your property.
LOCAL RATES ("Impuesto de Bienes inmuebles, IBI")
The Impuesto de Bienes inmuebles must be paid every year, in one payment between the 15th September and the 15th November, in each year.
This is payable in addition to any community charges and depends on the situation, quality, size and age of the property.
You as owner, must make this payment even if you have received no rates tax demand. It is your responsibility to find out what the exact amount is and pay it within the allocated time period. If you make a late payment, you must pay 10% more between the 15th and 30th November, and 20% penalty after the 30th November. If your property is part of Comunidad de Propietarios it may be that the rates charged on your unit may form part of your annual charge to the community of owners and you should enquire specifically about this. Since getting the information, and paying, can create difficulties for you, you can avoid these problems by going either to your gestoria (property manager) or your bank for help (Direct Debit).
If you arrange to have your bank pay this tax, you should also arrange to have the former owner of the property co-sign the agreement, at the time of your purchase. Payment by the bank will involve filling out a form authorising that the tax demands be sent to your bank rather than to you. You must report the acquisition of your property to the Delegacion de Hacienda for assessment of this tax. If you buy an existing house or apartment, the assessment will often be lower than for a new one.
Non-payment of the rates can result in legal proceedings, leading to an embargo of you goods or sale by public auction of your property, so do make sure this will be taken care of each year. The average Contribution Urbana tax is equal to 1/2% of the value than assessed by the Tax office, with the official valuation being somewhat less than the actual cost (or market value).
CAPITAL GAINS TAX
In accordance with Royal Decree of 7th June 1996, when the vendor is a foreign person the purchaser mus withhold 5% of the purchase price and deliver this to the Spanish Tax Office, to ensure that the vendor pays his Capital Gains Tax. If the vendor is a company non-resident in Spain, the purchaser will need to withhold this 5% unless the company has owned the property for more than 20 years.
I would like to remind you that you only have 30 days, after the Title deed has been signed to deliver to the Spanish Tax Office the 5% of the purchase price. The 5% retention is not applicable when the seller has owned for more than 10 years.
As you already know, the Capital Gains Tax is the Tax that you have to pay on the profit obtained when you sell the property. It is 35% of the difference between the purchase price and the selling price. The purchase price is calculated in accordance with inflation and all the fees that have been paid when you bought the property and land registry fees are all deductible from the profit and reduced by a further 11.11% per year of ownership (to count after the second year of ownership). After the property has been owned by the vendor for 10 years or more, any gains will be tax fee.
When selling properties bought on or after 1st January 1997, the taxable gain is the difference between the purchase price and the selling price (reduced by any qualifying expenses and taxes in connection with the purchase and/or sale) and reduced by a percentage to be published every year in the Spanish Budget. In both cases, non-resident vendors will pay tax at the rate of 35%.
The Spanish Authorities reserve the right to review the selling price. If they believe that the consideration has been under-declared by more than 20% or 2 million Pesetas, the difference between the official tax valuation and the declared price will be considered a gift. The vendor will be assessed additional capital gains tax of 35% on the difference and the purchaser will be liable to inheritance and gift tax.
if the amount that you have to pay for the Capital Gains Tax is
less than 5% of the purchase price, you can always apply for you
a refund. In the case that it is necessary to do so, you are required
to give the name and the number of your bank account in Spain, so
that the Spanish Tax Office can reimburse you the money. You have
to bear in mind that the Spanish Tax Office will take no less than
seven months to return the money to your account.
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