Herewith we give you an overview of the taxes you have to deal with in Spain. It is based on non-residents. Of course Home Costa Brava can help you with your tax declaration. Just fill in the contact form.
If you buy a new house with a plot from a contractor or a developer, you pay 10% VAT. If you also build a swimming pool and f.e. a garage, you also pay 10% VAT. However, if you decide to build them later, you pay 21/% VAT. Even if you only buy the land from a contractor, the VAT is 21%. You pay the tax directly to the vendor.
Transfer Tax (ITP: Impuesto Trans Patrimoniales)
When purchasing a home of a private person, you pay 10% tax. This tax will be charged in the register.
Tax for new construction (IAJD: Impuestos Actos Juridicos the Documentados)
In case of new construction, 1.5% of the declared value has to be paid to the Spanish state (the obra nueva declaración). This tax will be charged in the register. That means that when you buy a new built house or apartment, you have to pay the 10% VAT and the 1.5% IAJD.
Construction Tax (Impuesto sobre Construcciones, instalaciones y obras)
This tax is levied on all construction work for which you need a building license. This is a local tax. The base rate is around 2 to 2.5%.
Capital Gains Tax (Impuesto sobre Incremento the patrimonio de la venta de un bien inmueble)
If you are a non-resident selling your home, you must pay 19% tax about the profit you have made. However, since many vendors go abroad without paying the tax, the buyer when purchasing, must withhold 3% of the purchase price and pay this to the Spanish tax authorities. So when selling your home, you get 97% of the price of sale.
If you are at least 3 years fiscal resident in Spain and you buy a new property, you can use the capital gains tax for buying a new house. If you are 65 years or older and also at least 3 years fiscal resident in Spain, you are exempt from capital gains tax.
Tax on the appreciation of the land (Plusvalia)
This tax you pay to the town hall when you sell your home. The amount depends on the number of years that the property has been in your possession. The maximum period for which that tax is calculated is 20 years.
Property Tax (IBI: Impuesto sobre Bienes Inmuebles)
The property owners will pay about 0.4 to 0.6% property tax on the cadastral value of the property. The percentage depends on the municipality to which the property belongs. Normally you will receive between June and September an assessment. However, it is recommendable giving the town hall your Spanish bank account number so this is automatically debited.
Wealth Tax (Impuesto sobre el Patrimonio)
As a non-resident you are required to pay wealth tax. This tax is levied on the cadastral value of the property. The value is taxed in steps of 0.2 to 0.5%. You have until the 31st of December to pay the tax over the year before. This tax has been abolished in December 2008, however there are now plans to introduce this tax for capital over 700,000 euros.
Non-residents pay a kind of rateable value of 19% over 1.1 or 2% of the cadastral value of the house. If you rent out your home, you are required to pay 19% over the earnings you have made. Obviously you have a number of deductions such as garden maintenance, cleaning, interest mortgage, light etc. The rateable value applies only for the period that the house was not rented.
Many people do not pay this tax. Often in ignorance because they think they do not have to pay because they have no income in Spain. However, owning a home is automatically seen as a kind of income.
It is recommended that this tax will not be ignored. In 2011 the Spanish tax authorities have made a link to the register so they know exactly who owns a house. Also the electricity companies are obliged to provide information which houses are continuously occupied and which houses are not.