Property taxes in Spain for non-residents are a frequent topic of discussion and a cause of many Europeans’ and Americans’ headache when they are planning to move here. There are many peculiarities in Spain that you need to pay attention to before you start looking for Spanish property for sale. In this article, we will analyze the main points that will help you get comfortable with local legislation and taxation.
The first thing to understand is the concept of a resident and non-resident of a country. Spanish laws establish that a person who has lived in the country for more than 185 days a year can be considered a tax resident. Non-residents, respectively, are those who have spent less than 185 days in Spain. Depending on the category to which you belong, the taxes for you and your property will differ.
Since most people who want to buy property in Spain, do not plan to stay here on a permanent basis, but prefer to use it as an investment or housing during the holiday season, let us look at property tax in Spain for non-residents.
What taxes do non-residents need to pay in Spain?
There are 3 main categories of expenses that you should be aware of. For a non-resident, property tax (Spain) is as follows:
- Income tax. A non-resident is obliged to pay this type of tax if the acquired property brings him income. If the property was purchased for regular residence, you must pay the state a percentage of its cadastral value. In case of investment for profit, you will have to pay between 19% and 24% of the amount that you make from renting out your house. Residents of the European Economic Area will pay 19% of the tax, while residents of other countries must pay 24%.
- Luxury tax. This law, which was re-adopted in 2017, despite its repeal in 2008, implies the payment of taxes by non-residents for the properties with value exceeding a certain amount. This amount is regulated by municipalities, and therefore may vary. The tax is from 0.2% to 1% on property valued between €600,000 and €700,000 (on average) to 2.5% on property valued over €10,700,000.
- IBI (Impuesto sobre Bienes Inmuebles). Fixed tax, which is the same in terms of payment process and percentage for both residents of Spain and non-residents. It is municipal, and therefore, as in the previous point, it is calculated considering the selected region and city. The state is responsible only for the lower and upper limits of the tax – from 0.3% to 1.3%. The tax is calculated from the cadastral value of your villa or apartment.
How to calculate taxes accurately for non-residents in Spain?
The best option for a 100% correct calculation of Spanish property taxes for non-residents is to consult professionals. Only they can have updated information on the day of your application, which will allow you to evaluate the costs of buying and maintaining Spanish real estate.
Such specialists can be, for example, private lawyers. Real estate companies can also offer real estate tax calculation services for non-residents. Real estate agents must always be aware of market changes and local laws, and therefore they will be happy to help on a paid or free basis, depending on the particular company. Feel free to ask for help, as it can save you a lot of time, effort and money.