Our definitive guide to Spanish property taxes for non-residents outlines all of your fiscal obligations at every stage of the process. From buying and owning a property through to renting it out and selling. Allowing you to formulate a clearer picture of the overall costs involved in the process.
You are defined as non-resident in Spain if you live there for less than 183 days per year.
As a result of Brexit, UK national non-resident property owners can now only spend a maximum of 180 days per year in Spain, staying for a maximum period of 90 days in every 180 day period at a time.
You will be registered to pay tax in Spain in the first instance as a result of being assigned a NIE number when purchasing your property.
Buying A Property In Spain – Taxes For Non-Residents
If you are planning to purchase a property in Spain as a non-resident then it is advisable to budget an additional 10% to 15% of the purchase price to allow for additional taxes and fees.
Value Added Tax – New Build Properties Only
If you are buying a new build property you can expect to pay 10% in VAT (which is known as IVA in Spain) of the actual purchase price. So, for example, if you were to buy a new villa on the Costa Blanca for €500,000 you would then be required to pay an additional €50,000 in VAT/IVA.
VAT is not levied on resale properties – only new builds.
Stamp Duty – New Build Properties Only
Stamp duty in Spain is only levied on new build properties and is levied at the rate of 1.5% of the purchase price.
So, using the example above, the stamp duty payable on the €500,000 new build villa in Costa Blanca would add an additional €7,500 to your overall buying costs.
Transfer Tax – Resale Properties Only
The ITP – Impuesto de Transmisiones de Patrimoniales – is the name of the sole tax that is levied on all resale property transactions in Spain.
The amount of ITP that you will pay on a second-hand property varies between each autonomous region AND on the value of the property you are buying. As some regions apply an upward sliding scale relative to property value.
Nationally, the notional average ITP value is 7% of the purchase price – however in regions that are popular with overseas buyers, such as the Spanish Costas and the Islands, this can equate to anything between 6.5% in the Canary Islands and 10% in Catalonia.
So, it would obviously be sensible to check the ITP tax rate that you will be paying with the agent/vendor and your lawyer before finalising your property purchase budget.
It is important to note that this is a guide to taxes only. There are other additional fees and costs, such as land registry, estate agents and lawyer’s fees which will also add to the overall cost of your purchase.
Owning A Property In Spain – Taxes For Non-Residents
What taxes will you be obliged to pay as a non-resident owner of a second home in Spain?
Non-resident owners of second homes in Spain are obliged to pay tax on their property whether they rent it out and generate an income from it or leave it empty for their own sole use.
Modelo 210 Letting Tax
The Modelo 210 Letting Tax is applied to properties that are rented out by their owners.
UK nationals are now obliged to pay tax on their rental earnings at the rate of 24% (it was 19% prior to Brexit when the UK was still a member of the EU). In addition, UK nationals are no longer entitled to previous deductions versus tax, such as mortgage interest rates, insurance and bank charges.
This tax is paid quarterly on or by the 20th of January, April, July and October.
If no income is generated during a quarter, then Modelo 210 Non-Letting Tax calculations are then applied.
Modelo 210 Non-Letting Tax
Even if you do not rent your property out non-resident owners are still obliged to pay an annual deemed tax, known colloquially as the Non-Letting Tax, on or before December 31st.
The amount payable is usually between 1.1% to 2% of your property’s catastral/rateable value (not the purchase price). If the property is let out for part of the year the deemed tax is only applied to the period when the property is vacant.
If the property is owned by more than one owner each owner has to submit their own separate return.
You can read much more Modelo 210 Non-Letting Tax Information here.
Spanish Taxes Online offer a low cost, easy to use online tax submission service, saving you time and money. We calculate, fill out and file your Non-Letting tax return on your behalf, saving you all of the hassle of interacting with the Spanish tax authorities.
The IBI (Impuesto sobre Bienes Inmuebles) is an annual property tax levied annually by each municipality.
The amount payable can vary quite widely from region to region and is based on the catastral (or rateable) value of your property. The rate varies between 0.4% and 1.1% depending on where in Spain your property is located.
Non-resident owners of property with a value in excess of €700,000 are obliged to pay an annual wealth tax, (which has no real equivalent in the UK).
This tax is levied on an upwards sliding scale dependent on property value. Varying between 0.2% at the lower end of the scale to 2.5% for property valued in excess of €10.6 million. Some autonomous regions also apply different rates.
So if you are buying a property with a value of more than €700,000 it would be sensible to check your annual wealth tax liability prior to purchase.
Selling A Property In Spain – Taxes For Non-Residents
Capital Gains Tax
UK national non-resident property owners now pay 24% in Capital Gains Tax in Spain.
The capital gain is essentially the difference between the sale price and the original purchase price, i.e the profit or net gain made from selling the asset.
The Spanish tax authorities retain 3% of the purchase price from the buyer in order to ensure that non-resident vendors comply with their CGT obligations. In the event that the net gain or profit made from the sale is less than the value of this 3% retention then the monies are refunded.
The Plus Valia Tax is equivalent to a municipal capital gains tax, which is levied on properties when they are sold by the local town hall/ayuntamiento.
This tax is based on the catastral/rateable value of the property and the number of years which the vendor how owned the property for.
Normally, the vendor pays this tax. However, it is negotiable and if you are buying a property from a seller who is also a non-resident it can be advisable to pay this tax yourself in order to ensure it has been paid. As the town hall will pursue the new owner for any unpaid tax and not the vendor.