The Cost of Owning
Firstly, for all taxation purposes, it is essential to establish whether or not you are classed as a Spanish resident.
Residents of Spain are considered:
- Physically present in Spain for more than 183 days of the calendar year – including occasional absences;
- The main base of professional activities or economic interests are in Spain;
- Spouse and children reside in Spain
When you have purchased your apartment as a foreigner and paid the obligatory transfer tax, you need to be concerned with several costs: IBI- property tax, community fees, wealth tax and personal income tax (if you rent the apartment).
- The IBI is a mandatory property tax, which is paid to the local town hall. These taxes are aimed at improving the infrastructure and cleanliness of the selected community.
- Property tax slips are issued by the municipality, normally between the months of September and November. The rate of tax is usually between 1.1% and 2.0% of the cadastral value of the property.
- If you fail to transfer the IBI to the local authorities within the indicated timeframe, there will be a penalty charge of 10-20% of the IBI. To avoid such a situation, you can arrange for an automatic transfer to be made with a Spanish bank.
- Residents and non-residents have to pay IBI
- Community fees are costs paid to the president of the building. The costs are aimed at maintenance of the building.
- The cost of the community fees depends on the building and the maintenance required.
- Residents and non-residents have to pay community tax
Residents Personal Income Tax
IRPF is paid on income from property in Spain (e.g. income of renting out); If you do pay IRPF, remember to file the relevant forms exempting you from income tax in your home country.
Non-residents Personal Income Tax (IRNR)
IRNR is only paid on income from property in Spain (e.g. income of renting out);
Wealth tax for non-residents
- The wealth tax is a cost based on the net value of the property. Non-residents pay a fixed tax rate of 2.5% per year.
Example: If you are non-resident and purchased your property for €100.000 and you want to know how much your annual costs will be, you have to consider the following:
- Let us suppose that your IBI has been set at €400 by the local town hall.
- The community fees for your building are set at €400 per year.
- Your property is valued a €100.000, the wealth tax dictates that you pay 2.5% of the net value of your property. This means that a wealth tax of €2500 must be paid to the authorities.
If we accumulate all of the costs, then for this example there will be a yearly tax of €3300 for owning a property in Barcelona, excluding utility costs.
Additional non-residents property tax must be paid. It is calculated based on three values:
- The cadastral value of the property
- The value as assessed by the Spanish tax office
- The purchase price
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