Spanish property tax and obligations for property owners.

Spanish property tax

Tax requirements: 

When you are a tax resident in Spain, you are liable for personal income tax, capital gains tax and Spanish property tax (IBI), the equivalent to council tax in the UK.

Non tax-residents are liable for personal income tax, capital gains tax and SPanish property tax (IBI), plus the additional non-resident property tax.

The personal income tax for non-residents is only for income from property, your salary is taxed in the country in which you are resident. If the property is for your own use only, you are required to pay a percentage of your property in tax, if it is rented out you will need to declare your rental income on a tax return and will be taxed on that income. When properties are owned by married couples or individuals each person is liable for tax and complete separate tax returns.

Income that is subject to tax is as follows:

Property for own use (Modelo 210), the filing period is the 1st of January to the 31st of December of the following year. The income to be declared is a percentage of the cadastral value of the property, as indicated on your property tax receipt. The percentage is 2% of 1.1% if your property’s cadastral value was revised after the 1st of January 1994. The income tax rate of this is then 24.75%.

Modelo 214 is the form for declaring both property tax and income tax, with the filing period any time during the following year.

If you didn’t own the property for the entire year, or if it was rented for part of the year, then you would prorate the amount accordingly. Note that the rules regarding this tax were modified significantly on the 1st of March 2004.

Non residents who only own a home in Spain for their own use can choose to use a single form for declaring both property and income tax on the estimated income from the use of that property.

Property used for rental use Modelo 210 for ordinary return, using general section 210-A and indicating income type 01. The filing period for Modelo 210 is one month after the date on which the rent is due.

Property and Income collective return use Modelo 215, for collective return. Also indicate income type 01. Filing period for Modelo 215 (filed for each quarter) is in the first 20 days of the month following the end of the quarter. The income to be declared in this case is the total amount collected from the tenant, without deducting any expenses. The tax rate is 24.75% of this income.

This income is chargeable when it is claimable from the tenant or when it is collected (if earlier). Each rent due is taxed separately and, consequently, a return must be filed for each rent due. Or, collective returns may be filed which may include various chargeable income of one or more taxpayers falling within a calendar quarter.

A tax form must be sent after the termination of every rental agreement, in addition to the yearly declaration of income.

When selling a property which is jointly owned by two or more non-residents of Spain, a single tax return can be filed. This is Modelo 212 and it needs to be filed within four months of the date of sale. The withholding tax must be paid by the buyer within one month of the sale.

When selling a property which is jointly owned by two or more non-residents of Spain, a single tax return can be filed. This is Modelo 212 and it needs to be filed within four months of the date of sale. The withholding tax must be paid by the buyer within one month of the sale.

Spanish Capital gains Tax

Capital gains is the amount of profit made on the sale of a property, the difference between the purchase price and the sale price, and is liable for tax.

Both residents and non-residents are liable and this must be declared on your income tax form. The purchase value is the purchase amount plus the expenses and taxes paid that were involved in the purchase. The sale value is the sale amount minus the expenses and taxes that were paid.

If the property was purchased before the 31st of December 1994, the capital gains is reduces by 11.11% per year for each year (over two) that the property is owned.

If the seller is non-resident in Spain, the buyer must withhold 5% of the agreed price (regardless of whether the buyer is resident or not), using Form 211 to pay this 5% to the tax office. The buyer then provides the non-resident seller with a copy of the form, so that the seller may deduct this withholding from the tax payable in the return declaring the capital gain. If the amount withheld exceeds tax payable, the excess is refundable. If the tax withheld is not paid, the liability for the tax is attached to the property.

Important …

As a client of SpanishResidency.co, we do not expect you to have to worry about filing your tax returns, we have a team of expert accountants who will ensure it is all done for you.  For further details, simply Contact Us now.