Real Estate Tax Consultancy
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- Tax filing: Form 210, Wealth Tax, IBI, Form 600.
- Personalized tax advice from an expert specialist.
- Tax planning and optimization, applicable deductions and tax savings.
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Real Estate Taxes in Spain
What to consider if I invest in properties in Spain?
For investors acquiring or renting real estate in Spain, without making occasional use or residing there, it is essential to understand the tax implications associated with these transactions.
How do I know if I am a tax resident in Spain?
Tax residency refers to the nation in which you predominantly reside, file tax returns, and fulfill your tax obligations. If you meet one of these requirements, you are considered a tax resident in Spain:
- If you have stayed more than 183 days in Spain within the same calendar year.
- If your main professional activities are carried out in Spain (employed as an employee or self-employed as a freelancer).
- If your main interests, such as your spouse or dependent children, reside in Spain.
If you are a non-resident, when it comes to property rentals, these investors must file the Non-Resident Income Tax Return using Form 210. This quarterly tax is levied on the ownership, rental or transfer of real estate of non-residents within Spanish territory.
All taxes and Declarations to keep in mind
I have purchased a property in Spain:
The Transfer Tax (ITP) is levied on the acquisition of second-hand properties, with rates varying according to the autonomous community. Its declaration is made through Form 600.
On the other hand, in the purchase of new properties, the Value Added Tax (VAT) is relevant. Being the buyer you could face the obligation to withhold and pay the VAT to the seller.
Also, the Plusvalía Municipal (Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana – IIVTNU), a local tax on the increase in value of land, is calculated according to the cadastral value and the period of tenure.
I already have a property in Spain:
If you already own one or more properties, the taxes to consider include:
- Real Estate Tax (IBI): Annual local tax based on the location and cadastral value of the property, whether rustic or urban.
- Non-Resident Income Tax (IRNR): If applicable to you, you must file Form 210 quarterly for rented properties that generate income, and annually for non-rented properties.
- Wealth tax: It is filed annually using Form 714 and only applies if your assets exceed €700,000.
I want to sell my property:
At the sale stage, investors must take into account these taxes:
Capital Gains Tax, which is applicable to the gain obtained on the sale of the property, with a tax rate of 19%. Want to know exactly how much profit you make on the sale of your assets? Use our Capital Gains Tax Calculator!
Also (if applicable) the Non-Resident Income Tax (IRNR) withholding requires a 3% withholding on the sale price, considered a payment on account of the final tax.
In addition, the Plusvalía Municipal is applied on the sale of urban properties, calculated on the increase in value of the land.
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FAQ
General
Info
The filing of the Non-Resident Income Tax (IRNR) involves the determination of the taxable income, which varies depending on whether the property is rented or not:
- For non-rented properties, the “imputed rent” on the cadastral value is used.
- For rented properties, the taxable base is calculated by subtracting the deductible expenses from the gross rental income.
It is filed annually (in the case of non-rented properties) or quarterly (otherwise) through Form 210. Deductions can be applied for expenses such as those related to the maintenance and repair of the property. In addition, depending on the investor’s country of residence, double taxation avoidance treaties may apply and affect the tax treatment.
It is essential to be informed about possible changes in tax regulations and seek professional advice to optimize your tax situation and take advantage of any tax benefits applicable to your case. Schedule your consultation now!
Tax rates of 24% on the taxable income (or 19% for EU residents) are applied in the context of the Non-Resident Income Tax (IRNR) in Spain. These rates are levied on capital gains and income generated by the rental of properties by non-resident investors.
As mentioned above, for non-rented properties, the taxable base is determined by the “imputed rent” on the cadastral value, while for rented properties, the taxable base is calculated by subtracting the deductible expenses from the gross rental income.
- Limitation of Liability: The partners of an SL have liability limited to the capital contributed, which protects personal assets in case of debts or financial problems related to the property.
- Efficient Management of Multiple Assets: Provides the investor with the ability to centralize the ownership of several properties under a single legal entity. This simplifies administration by unifying administrative management, facilitating more effective investment strategies, and providing flexibility in the acquisition of new assets.
- High administrative costs and responsibilities: The creation and management of an SL entails administrative costs and responsibilities, such as the filing of annual accounts with the Commercial Registry, payment of corporate income tax, accounting management and compliance with regulations, which can be more complex and costly than the individual management that only entails the IRNR declaration.
- Both a Limited Company (SL) and an individual can deduct common expenses when buying a property, such as mortgage interest, maintenance, and taxes. However, there are notable differences in areas such as the treatment of VAT, depreciation, financial expenses, and the costs associated with the incorporation and administration of the SL, which may be deductible for the business entity but not for the individual.
Yes. In the context of the Non-Resident Income Tax (IRNR), deductions can be applied for certain expenses related to the property, such as maintenance and repair expenses. In addition, the possibility of withholding 3% of the sale price on the sale of a property acts as a payment on account of IRNR, facilitating the management of tax obligations.
They may also be exempt from Wealth Tax if their assets do not exceed €2,000,000 and in some transactions, such as the purchase of new properties, exemptions or reductions in Value Added Tax (VAT) may apply, depending on the specific circumstances of the transaction and the regulations in force.
Likewise, double taxation treaties may offer tax adjustments based on the tax residence of the investor, avoiding double taxation.
Yes, the NIE is required to buy a property in Spain or to carry out other real estate transactions. This number is a unique tax identifier assigned to foreigners engaged in economic activities in the country, including the purchase or sale of property.
The NIE is required both for the signing of purchase and sale contracts and for other procedures related to real estate transactions.
Do you want to obtain your NIE to invest in Spain? We help you to get it with our comprehensive service.
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