Taxes in Spain
What kind of taxes will face a future property buyer?
In case of a purchase of a new house or a secondary property the taxation in Spain is always 10%. For example when the price of the apartment is 500.000€ (with a mortgage loan or without), a one-time tax will be 50.000€ . In case of a new housing it is called IVA (VAT) and in case of a secondary housing – ITP (impuesto de transmisiones patrimoniales).
When do you need to pay the taxes:
Within 30 days after the transaction without a mortgage, and in case of the mortgage the same day of the transaction. The payment of the taxes will be controlled by the so-called gestor – it is a lawyer, provided by the bank, which will supervise the payment of the taxes and registration of your new property in the registry office. This services you can pay at the same moment of the transaction in the notary office as part of the exposed bank estimates for the entire buying and selling process (payment of taxes, notary and registration fees, lawyer (gestor) services).
If you decided to buy a new property there is another type of the tax called IAJD (tax on the documented legal acts). In Catalonia it is 1.5% of the transaction amount. Total amount of taxes for a new housing will be 11.5% of the total cost. With a secondary housing this tax is not applicable.
Also you pay IAJD if you apply for a mortgage. In Catalonia it is 1.5% from the amount of the mortgage.
Current taxes – IBI:
The tax on property in Spain (IBI) is paid by the owner every year. The amount of the tax is 0.4% – 1.1% of cadastral value of the property. This tax can be paid from your current account in Spain, and its write-off takes place automatically. If a value of a flat is 350.000€, the IBI tax will be around 500-700€ per year.
Tax on non-residents income (IRNR – impuesto sobre la renta de no residentes):
According to the Spanish law, individuals – non-residents have to pay a tax on owning property in Spain, even if it is not leased. This tax is calculated not on the entire cost of housing, only from 1.1 – 2% of the cadastral value. The tax is 24% from this ‘’income’’(i.e. 24% of 1.1 – 2% of the cadastral value of your property). The declaration served once, at the end of the year (Form 210).
Tax on renting out:
In case of a renting out your property in Spain the income tax is 24% (of the value received from the rent). Declaration form 210 serves trimestrale – 20th day of April, July, October and January.
If you are not staying in Spain so often and don’t speak Spanish the best option is to find a qualified accountant (gestor), who will prepare the declarations and pay your taxes. The cost of this services ranges from 40€ to 60€ per month.
Personal income tax for residents (IRPF):
All income from employment, lease or sale of a property and income on banks deposits are taxed. In case of a real estate sales you are paying this tax the same year when a transaction was made. The tax will be calculated from the profit, i.e. the difference between the purchase price and the sale price.
The higher is the income, the higher personal income tax is. In the provinces of Spain these rates vary (Catalonia from 21.5% to 48%, with an annual income more than 175.000€). The tax is calculated before 31 of December of every reporting year. The tax return is filed from 7 of April till 20 of June. If you want to save your time, it would be better for you if a qualified accountant (gestor) will assist you.
Tax on profit from the sale of a real estate for non-residents (Plusvalía):
If you are not a resident in Spain and decided to sell a property, you will pay Plusvalía tax which is 19%. Also the Spanish law system provides instant hold of 3% of the cost of housing from this amount. The taxpayer will have 30 days after the transaction to pay the tax. If there is no profit you have the same 30 days to prove it to the tax authorities. A gestor will also help you to do it. And then your previously deducted 3% is coming back to you.
About the current real estate costs read here.