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The Taxes Behind Owning a Spanish Property

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In the latest of our blog posts about taxes in Spain, we take a look at the taxes you need to pay if you own a property in Spain.

Property Tax

This tax (known as Impuesto sobre Bienes inmuebles/IBI) is charged by the local council and goes towards services such as beach and street cleaning, culture and sports facilities, local police services, upkeep of schools etc.. How much you pay is based on the fiscal value of your property and an annual rate. Generally speaking, coastal resorts and cities charge higher property tax than inland towns and villages.

Property tax is paid annually by direct debit. Some councils (e.g. Mijas) make a one-off annual charge; some such as Marbella and Malaga allow for payment in installments; and others (e.g. Fuengirola) have bi-annual payments for residents. When you buy a property, your lawyer will arrange to set up your property tax payments.

Refuse Tax

Most councils charge an annual tax for refuse collection, a one-off annual charge, also payable by direct debit. Expect to pay between €100 and €400 a year, depending on the council.

Non-resident Taxes

Owners of Spanish property who are non-resident in Spain are also liable income and wealth tax.

Income tax: Spanish tax rules that all non-resident property owners receive income of 2 per cent of the fiscal value of the property and are charged 25 per cent tax on this amount (regardless of whether you actually receive any income from your property, e.g. from holiday lets).

Wealth tax: Non-residents must pay wealth tax on their property in Spain. The amount you pay depends on the value of your property and is based on a sliding scale from 0.2 to 2.5 per cent.

Tax declaration: Non-residents have until 31 December each year to file their income and wealth tax. Andalusian Lawyers offers this service to clients. Please contact us to find out more.

Resident Taxes

Income tax: If you’re resident in Spain, you must declare your annual income and usually pay income tax. Your principal residence is exempt from income tax but if you own more than one property, you are liable for income tax on the fiscal value of the property.

Wealth tax: Residents are also liable for wealth tax, although there are certain allowances e.g. €300,000 exemption for your principal residence.

Buying a property in Spain? Read about the taxes involved in a purchase enlace al post del 14.1.14 and download our free guide

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