When you own a property in Spain, you are responsible for the following taxes:
If you are a non-resident of Spain, you are subject to the non-resident personal income tax described below. Personal income tax only relates to the property; income from salary is declared where you are a resident.
If you own an apartment (or house in a complex), you are also required to pay community fees (usually paid quarterly). Your property deed will mention this. These fees pay for maintenance of the building.
Please ask us for our Homeowner Tax Service proposal. This service includes filing your personal income taxes, fiscal representation, and answering any questions related to your IBI, community fees, or utilities.
Non-residents: Personal income tax (IRNR)
If the property is owned by a married couple or by various individuals, each person is treated as a separate taxpayer and must file returns separately.
If the property is for your own use, you must pay a certain percentage of your property
If the property is rented, you declare the amount you have received in rent.
The income to be declared is a percentage of the cadastral value of the property, as indicated on your property tax receipt. It is 2%, or 1.1% if the property's cadastral value was revised after January 1, 1994. If you are an EU resident, the tax rate is then 19% of this "income". If you are not an EU resident, the tax rate is 24%. 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 March 1, 2004.
A non-resident whose only taxable property in Spain is a dwelling fundamentally for own use may elect to use a single form for declaring both property tax and personal income tax on the estimated income from the use of that dwelling.
The income to be declared in this case is the total amount collected from the tenant, without deducting any expenses. If you are an EU resident, the tax rate is then 19% of this "income", otherwise the tax rate is 24%.
This income is chargeable when it can be claimed from the tenant or when it has been 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 the rents of one or more taxpayers falling within a quarter.
A tax form must be sent after the termination of every rental agreement, in addition to the regular declaration of income.
Non-residents: Additional property tax
Form 714, the same as for resident taxpayers
Filing period: May 1 - June 20 of the following year.
Non-residents must file this tax form if they own property in Spain on December 31 of each year, regardless of the value of the property. The tax is calculated based on the highest of the following three values:
The taxable amount is based on the value plus any charges or liens on the property minus the mortgage the property has, if any.
Each individual must file a separate return; if a property is owned by a married couple or by various persons, each one of them must file a single return for the portion of the house owned (usually 50%).
Residents and non-residents: Capital gains on the sale of property
Form 210 (using section 210-H). When the property being sold is owned jointly by a married couple in which both spouses are non-residents, one spouse may authorize the other to file a single return.
Filing period: three months from the end of the period in which the purchaser of the property must pay the withholding tax (which is one month from the date of the sale).
Capital gains on the sale of property are taxable income that must appear on your income tax form for both residents and non-residents. This income is chargeable when the capital gain takes place. The gain is generally the difference between the sale and purchase values. The purchase value is the purchase amount plus the expenses and taxes paid that were involved in the purchase (with possible adjustments based on the purchase date). The sale value is the sale amount minus the expenses and taxes that were paid. If you are an EU resident and you have subsequently reinvested this capital gain in a new property, you may reduce the capital gain by the amount of the new purchase, as long as the reinvestment takes place before the deadline to file this tax form. (For specific terms, please see the form's instructions.)
If the property has been rented, the purchase amount must be reduced by the amount of depreciation corresponding to the rental period. The depreciation is also updated on the basis of the year in question.
Withholding tax on the sale of the house: If the seller is non-resident, then the buyer must withhold 3% of the agreed price (regardless of whether the buyer is resident or not), using Form 211 to pay this 3% 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.
|Sample non-resident tax owed for a property sold|
|Adjustment rate for inflation (sample for 2002)||1.0612|
|Purchase value adjusted||95,508€|
|Non-resident tax rate||35%|
|Tax on capital gain||19,422€|
|Withholding tax (3% of sales price) (Form 211)||7500€|
|Tax payment (Form 210)||11,922€|
Spanish tax office guide to taxes for non-residents
Spanish tax office Form 210 and instructions
UK: HMRC (UK's tax agency). Includes guides to leaving the UK, and determining residency.
The corporate tax rate is 25%. All expenses for the property are deductible, including utilities, renovation work, management fees, and property taxes.
There are accounting obligations involved in maintaining an SL.
Shareholders and directors of the SL may be residents or non-residents.
If any future litigation is directed at the individual, liability cannot involve the property because it is the SL that owns the property, not the individual.
As a corporation, the capital gains do not have to leave the company to be taxed at 25%. They can be left as "reserves" for the company. There are five years in which to pay taxes on that capital gain, or to spend that money on another business (or house).Can I file my own taxes as a non-resident?
A non-resident who only owns one property in Spain is allowed to file their own tax forms.
However, please note, the tax office does not send notifications of IBI tax to addresses outside Spain. It is therefore advisable for any person who has a property in Spain but doesn't live there all the time, to appoint a Fiscal Representative.
A Fiscal Representative must be resident in Spain. The tax authorities will send all correspondence relating to your affairs in Spain directly to your Fiscal Representative. Appointing a Fiscal Representative will ensure that the Spanish tax authorities have a point of contact, so that unnecessary debts or fines can be avoided.