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Property taxes in Spain: What are the costs?
Buying property tax:
Purchasing a property in Spain involves the payment of different taxes, ranging between 8% and 11.5%, whether the property is newly built, generally sold by banks or construction companies, or the property has already been owned by another person, a resale.
Selling property tax:
When selling a property in Spain you need to be aware of the payment of Plusvalia and Capital Gains Tax. The payment of Capital Gains Tax is between 19% and 24% and Plusvalia would be a percentage of the sale.
Plusvalia
Plusvalia is paid to the local Town Hall where the property is located. The calculation is based on the increase of the value of the land, known as valor catastral, and the number of years you were the owner. The land value is in the IBI receipt and it increases every year, regardless of the real market value of the house, so Plusvalia is due even if you lose money selling.
This matter is now being challenged in the Spanish Courts, but to no practical effect, as every Town Hall still demands the payment.
If you wish to avoid surprises try to contact your Town Hall to get a calculation before selling.
When the seller is a non-resident, the buyer could be found liable for the payment, so it is important to check by you or your lawyer that the Plusvalía Municipal has been paid within 30 days of the sale.
Capital gains tax
As a seller, you will pay capital gains tax on your profits from the sale.
Capital Gains Tax is 19% for non residents from EU/EEA countries or 24% for non residents from other countries.
According to Spanish tax laws, if you’re a resident, you are applied a scale between 19% and 23% and can also get tax relief if you have lived in the property for at least three years before selling it.
As a seller, you need to file a tax return taking in account the 3% of purchase price that was initially retained by your buyer and pay the remainder within three months after the sale.
If the amount withheld by the buyer exceeds the CGT payable, the seller may claim a refund of the excess amount, so it is important to obtain proof of the original 3% payment from the buyer, in order to file your return and fill the necessary forms.
Owning property tax
The tax implications you have to be aware of when you owe a property in Spain are IBI, refuse collection, personal income tax and Wealth Tax. person, a resale.
Property Ownership Tax – IBI in Spanish
This tax is based on the property without distinction whether the owner is a resident or not. Calculated on the basis of the catastral value set by the town hall the tax rate goes from 0.4% – 1.1% depending on the Spanish region.
Payment by direct debit from your bank is the best option.
A 3 bedroom apartment pays around 400€ a year while a large villa can pay around 2000€.
Refuse Collection – Exacciones municipales in Spanish
This is a much smaller tax paid yearly per property, around 80€ for a 3 bedroom apartment, as an example. It covers drainage & refuse collection.
Personal Income Tax
Residents in Spain do an annual Rental Declaration which would also include income gained by renting their property or imputed income tax if their property remains empty and will be taxed according to other earnings and personal tax allowances.
Non-residents who own property in Spain have the fiscal obligation to declare earnings on their property and pay an annual income tax that varies according to whether the property is rented out or not.
Rented out
- 19% for EU/EAA citizens.
- 24% for non EU/EAA citizens.
This tax must be paid quarterly on January, April, July and October before the 20th day of the month.
Not rented out
If your property remains empty for all or part of the year the Spanish Tax Office taxes the potential income your property could produce if it was rented. This is known as Imputed Income Tax, payable as follows:
- 19% for EU/EAA citizens.
- 24% for non EU/EAA citizens.
How is Imputed Income Tax calculated?
The catastral value is multiplied by a percentage following these rules:
- 2% if the rateable value has not been updated within the last 10 years.
- 1.1% if it has been updated within the last 10 years.
Wealth Tax
Non-resident owners of Spanish property may be obliged to pay wealth tax depending on the value of their Spanish property. There is a general exemption of €700,000 which is not subject to wealth tax.
Residents on the other hand will be taxed on their worldwide assets.
In Malaga the state allowances of 700.000€ apply, and over that amount progressive rates start at 0.24% on assets up to 167,129€ and rise up to 3.03% on assets over 10,695,996€.
While in Alicante the individual allowance is reduced from €700,000 to €600,000 and over that amount progressive rates start at 0.25% on assets up to €167,129 and rise up to 3.12% on assets over €10,695,996.
For official information from the Spanish government about Wealth Tax check this documentation.
How much is selling property tax in Spain?
When selling a property in Spain you need to be aware of the payment of plusvalia and capital gains tax. The payment of capital gains tax is between 19% and 24% and Plusvalia would be a percentage of the sale.