Buying in Spain
Tax Issues when investing in Spain
There is a 7% tax on resale and new properties. For staged payments on a project build, the tax is paid on each staged payment.
Liability to Yearly Taxes due to the Ownership of Real Estate in Spain
As a non-resident owner of property in Spain, you are liable for Spanish taxes. Taxes are classed as either Municipal or State.
Municipal Taxes include:
- Tax for the collection of rubbish (Recogida Domiciliaria de Basura). This is often included in your Community Fees
- Municipal taxes are paid annually to the Town Hall. These vary depending on the area in which you purchase your property.
- Each Town Hall has its own period for voluntary payment, favouring prompt payers with certain discounts
State Taxes include:
- Wealth Tax - This is paid annually on the 31st of December and is calculated by percentage value of the property.
- Property value is taken as the highest of the following:
Purchase Price
Cadastral Value
Value checked by the taxation authorities.
Income Tax for Residents
This is calculated according to two criteria:
- If the property is used only by its owner
- If the property is rented to a third party
In the first case, the income on which the tax is applied is a legal income and is presumed to have been yielded to the benefit to the owner of the property. This is calculated at 2% of the cadastral value of the property. The tax paid is 25% of this amount.
This supposed or legal rent is only paid on dwellings, not on plots or commercial premises. If the property is let to a third party, the rate is 25% on the net rent, as declared by the landlord.