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Taxes for Property Owners in Spain

Article adapted from the Agencia Tributaria’s site.

The tax requirements are as follows:

If you are a resident, you are subject to personal income tax (including capital gains tax) and property tax (IBI).
If you are nonresident, you are subject to personal income tax (including capital gains tax), property tax, plus an additional nonresident property tax. Personal income tax for nonresidents only represents income from the property; income from salary is declared where you are a resident. 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.

Note that since 2013 if you are resident in Spain and have properties or assets abroad over 50,000€ you have to declared them thru the form 720 . We can do that for you on request.

If they Spanish tax authorities find out you own assets over 50,000 € abroad and you don´t declare them you can be severely fined

Nonresidents: Personal income tax

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.

Depending on what the property is used for, the income subject to taxation is as follows:

Property for own use
Form 210
Filing period: January 1 – June 20 of the following year.
(Form 214 is the single form for declaring both property tax and income tax, with the filing period any time during 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. It is 2%, or 1.1% if the property’s cadastral value was revised after January 1, 1994. The tax rate is then 25% of this “income”. 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 nonresident 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.

Property used for rental
Form 210 for ordinary return, using general section 210-A and indicating income type 01.
Filing period for Form 210: one month after the date on which the rent is due.
Form 215 for collective return. Also indicate income type 01.
Filing period for Form 215 (filed for each quarter): 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 25% 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.

Residents and nonresidents: Capital gains on the sale of property
Form 212. When the property being transferred is owned jointly by a married couple in which both spouses are nonresidents, a single return may be filed.
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 nonresidents. This income is chargeable when the capital gain takes place. The gain is generally the difference between the sale and acquisition values. The acquisition value is the purchase amount, plus the expenses and taxes involved in the purchase (excluding interest) that were paid by the person now selling it. 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. The sale value is the sale amount, minus the expenses and taxes involved in the sale that were paid by the seller.

However, if the property being sold was acquired before December 31, 1994, this capital gain gets reduced by 11.11% per year for each year (above two) during which the asset was held. This holding period is calculated by taking the number of years between the date of acquisition and December 31, 1996 and rounding up.

Withholding tax: If the seller is nonresident, 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 nonresident 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.

If you are the vendor of the property and 3% has been taken from the Price of it we can claim it back if you are entitle to it

Nonresidents: Additional property tax
Form 714, the same as for resident taxpayers
Filing period: May 1 – June 20 of the following year.

Nonresidents 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 cadastral value, as reflected in the property tax receipt for the year to which the return refers.
The value assessed by the Spanish Tax Office for purposes of other taxes.
The acquisition price.
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%).

Categoría: CONVEYANCING-plus