Taxation of Non-Residents with Real Estate in Spain

You should know that even if you are not a resident of Spain, the taxation of non-residents with real estate in Spain is mandatory and there are several taxes you should be aware of. Here we present the taxes that you have to pay if you are the owner of real estate in Spain and do not offer hotel services.

Depending on your situation there are different taxes to declare, for example if you decide to sell, lease or donate your property, there will be a different tax and procedure. The country in which you currently reside will also have variable effects on your taxation to Spain due to double taxation agreements. As there are so many variables, we recommend you consult with your trusted accountant who is knowledgeable about Spanish tax laws.

Real Estate Tax (IBI: Impuesto de Bienes Inmuebles)

As the owner of a property, you have the obligation to register with the General Directorate of Cadastre and pay the Real Estate Tax to the town hall on an annual basis.

If you have a property in Spain and you do not rent it, but you have it unoccupied at your disposal, the tax that corresponds to you is the IBI.

This tax must be paid by whoever owns the property on January 1 of each year, so if you plan to sell your property after that day, you will still have to pay this year.

The amount to pay for this tax is calculated by the city council, this value is based on the cadastral value of the land and buildings.

The payment period is determined by the city council, we recommend you pay attention to this period to pay in advance and thus be able to obtain bonuses and avoid penalties for late payment. You can pay this tax directly at the collection offices of your town hall or by direct debit, the latter has several advantages, in addition to being more comfortable, you can have the option of paying in installments.

Wealth Tax (IP: Impuesto sobre el Patrimonio)

This tax must be declared by every taxpaying natural person in Spain. The payment must be made every year between the months of April and June, but the accrual of this tax is on December 31.

The ISP taxes the net worth of natural persons, the set of assets and rights of economic content of which they are the owner, with deduction of charges and encumbrances that reduce their value, as well as the personal debts and obligations of the owner.

The terms of this tax vary depending on the country in which you reside, if in your country there is a double taxation agreement with Spain, it is likely that you only have to declare your assets within Spanish territory. The variation in deductions, exempt minimums, bonuses, etc. will also depend on each autonomous community.

Non-Resident Income Tax (IRNR: Impuesto sobre la Renta de No Residentes)

This tax includes several scenarios for paying taxes on your property that fall under the same IRNR; there is a tax if your property is uninhabited, if you rent it, if you rent it providing certain services or if you sell it, in any case you have to pay taxes, there is no way to escape.

Imputed income from urban real estate

This tax is charged for owning a habitable property and not making use of it. This means that homes under construction or real estate that are not susceptible to use do not apply this tax.

As a general rule, the amount of this tax is calculated based on a “fictitious” income with an accrual date of December 31 of 2% of the cadastral value of the property, however, there are some exceptions to this rule. No deductible applies to this tax. You can get more details on the website of the tax agency.

Returns on real estate capital

This is the tax to declare for the income resulting from renting your property. The yield to be declared is the full amount received from the lessee, without deducting any expenses.

However, in the case of taxpayers residing in another Member State of the European Union, also in Iceland and Norway, for the determination of the tax base, they may deduct the expenses provided for in the Personal income tax lawprovided that it is proven that they are directly related to the income obtained in Spain and that they have a direct and inseparable economic link with the activity carried out in Spain.

Profits generated by the sale of real estate

The difference between the acquisition value (the purchase price) and the transfer value (the sale price) is considered profit. A tax rate of 19% is applied to the profit.

The term to declare this tax is three months from the end of the term that the person who acquired the property has to deposit the withholding (this term is, in turn, one month from the date of sale).

Municipal capital gains

The Tax on the Increase in the Value of Urban Land (IIVTNU) or better known as Municipal Capital Gains is paid when selling the property, all citizens and foreigners are required to make this payment.

In the event that the seller is not in Spain, the party liable for payment will be the buyer as a substitute for the taxpayer.

This tax must be paid within 30 days after the closing of the sale.