Real estate tax, also known as property tax, is paid on property owned by an individual or company. It is known as an "ad-velorem" tax, and is based on the value of a property. There are various taxes to be aware of when it comes to buying, selling and renting properties; if you are looking at entering the property market in Spain, you will find that taxes differ from the UK
Here, we will discuss whether Spanish property tax applies, and the various taxes to be aware of when buying, selling and renting Spanish property. We will also explore non-resident tax, and when you should consult a solicitor for your real estate and Spanish tax concerns.
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Find out more about the taxes you need to be aware of as a Spanish property owner
Here are the taxes that individuals buying Spanish property need to pay
Here are the taxes to be aware of if you are selling Spanish property
If you’re choosing to rent out your property in Spain, there is still tax you will need to pay
In you do not reside in Spain, be aware of the tax you will still need to pay
Here’s how we can help you
Frequently asked questions
If you are a property owner in Spain, you are required to pay two different taxes; Spanish income tax (including capital gains tax) and annual real estate tax. If you do not reside in Spain, but own Spanish property, you will have to pay an extra tax, known as non-resident property tax. To pay these taxes, you must have a numero de identificacion de extranjero (NIE).
Taxes, alongside all other costs concerning the buying and selling of property in Spain, should be taken into consideration.
When buying property in Spain, you should expect to pay between 8% and 11.5% in taxes, but this can differ between new and resale properties. For a new property, you will have to pay 1.5% of the purchase price on stamp duty and VAT (IVA) which is imposed at 10% of the purchase price.
For resale properties, the only tax to be aware of is 'transfer tax.' The amount of transfer tax you pay all depends on the price of the property. This tax also differs depending on the property type, for instance, if the property has garage space in a car park. As well as these taxes, individuals looking to buy property in Spain should consider the notary fees, estate agent fees and mortgage fees before committing.
When selling property in Spain, there are two taxes you may need to consider; plusvalia and Spanish capital gains tax.
Plusvalia is a local tax that you must pay to the town hall located in the area where the property you are selling is located. This tax is based on the value of the land and the length of time you owned your property. However, plusvalia does not have to be paid if the value of the land is lower when it was sold than when it was purchased.
You will need to pay capital gains tax on any profits made from selling the property if you are not a Spanish resident, and if you are a Spanish resident and the property isn't your main home. The amount of tax payable is calculated based upon the price declared when the property was purchased and what was declared when it was sold. Non-Spanish residents from the EU and EEA countries usually pay around 19% in capital gains tax, whereas as non-residents outside of the EU pay around 24%.
If you are struggling to understand taxes when selling your property in Spain, our qualified Spanish solicitors can help.
If you are considering renting out a property in Spain, you will be taxed based on how much you receive as a landlord, known as rental income. There are no VAT (IVA) taxes on rental properties unless they are being utilised for commercial use. Deductible expenses when renting out a property include community fees, repair costs and utility fees.
The taxes when renting in Spain generally apply to those who choose to rent their property to others, and rental income tax rate can vary depending on how much money the landlord makes from renting, and whether they are an EU citizen or not.
Individuals who don't live in Spain, but own Spanish property, will still have to pay certain taxes. Non-residents who own a property but do not rent it (impuesto de la renta de no residentes, declaracion ordinaria) will have pay personal income tax. Even if you have no other taxable income in Spain, you will still have to pay this tax.
Some non-residents will also have to pay a Spanish wealth tax (Patrimonio). This is based on the net value of their assets after deductions such as mortgages and is collected by regional governments. Non-Spanish residents can pay these two taxes using the same form, but you must only own one property in Spain and only utilise it for personal use. There is also a tax to pay if you rent out your property (impuesto de la renta de no residentes), and municipal property tax (impuesto sobre Bienes Inmuebles), which is similar to council tax.
If you are confused about certain taxes and would like more advice, you can get in touch with our expert real estate solicitors here.
Buying and selling property can be difficult to navigate, especially when tax is mentioned. If you believe that you are being wrongly charged tax, or something legally doesn't seem right, you should consult a Spanish real estate lawyer as soon as possible.
Here at Giambrone and Partners, we can guide you through Spanish real estate tax, no matter whether you are buying, selling or renting out your property. To find out more about how we can assist you, you can get in touch with us today.
For non-residents, capital gains tax is calculated at a flat rate of 19% of profits made on the sale of the property. For a resident, you will owe 19% for the first €6,000 of profit, 21% between €6,000 and 50,000, and 23% if the profits are above €50,000
Spanish residents and EU citizens can claim expenses from their Spanish rental income, including bank charges and mortgage interest.