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TAXES ON PERSONAL REAL ESTATE IN SPAIN 2010

Income tax credits

Sale of Spanish property by non-residents

Sale of Spanish property by residents

Taxation of Spanish rental income of non-residents

Wealth Tax

Local Property Tax (IBI)

Local mains drainage / refuse collection tax 

Transfer tax (ITP) on purchase of property

Plusvalia on sale of property

Income tax credits

The taxpayer is entitled to a tax credit for investment in their main residence (Deduccion Vivienda Habitual).

Credit is available for outright purchase cost and mortgage interest.

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Sale of Spanish property by non-residents
 

In order to comply with EU non-discrimination regulations, capital gains tax  rates for both residents and non residents have been equalised from 1st January 2007 onwards.

19 % tax is payable on the capital gain.

For properties purchased after 1986, 3% of the declared sales price is withheld from the vendor at the point of sale.  This is paid by the purchaser (normally via their solicitor) by submitting form 211, within one month of the sale.

The balance of tax payable / reclaimable is settled by the vendor on submitting form 212, within a further two months.

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Sale of Spanish property by residents

18% income tax is payable on the capital gain if the property has been held for more than one year.

Rollover relief

This is available when the proceeds of the sale are reinvested, within two years of the sale, in the taxpayer's new main residence.

The taxpayer must have lived in property for 3 years, or had to sell because of change of job, marriage or separation.

The gain is deferred and taxed on the sale of the new property.

The sale must still be declared in the annual tax return.

Absolute relief

This is available for resident taxpayers over 65, who have lived in property for at least 3 years
 

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Taxation of Spanish rental income of non-residents

Rental income is taxable at a flat rate of 24% with limited deductions.

This must be declared on a quarterly basis, submitting declaration 210 or 215.

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Wealth Tax- Impuesto Sobre el Patrimonio


As of 1st January 2009, Spain has abolished Wealth Tax.
 

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Local property tax- Impuesto Sobre Bienes Inmuebles (IBI)

This is an annual tax based on the Cadastral Value of the property.

The rate varies according to the local authority, typically 0.5% to 1%.
 

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Local mains drainage/ refuse collection tax - Basura y Alcantarillado

This is an annual tax payable by individual property owners or their comunidad de proprietarios.

 

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Transfer tax (ITP) on purchase of Spanish property

The tax payable by the purchaser is, as a general rule, 7% of the declared cost.

This is payable in situations where there is no VAT (e.g. purchase of second hand property).

It also applies to the sale of shares in a property holding company, where over 50% of company assets consist of  Spanish real estate.
 

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Plus-valia (land appreciation tax)

This is payable by the vendor, although sometimes the purchaser agrees to reimburse the vendor as part of price negotiations.

 The rate of taxation is determined by each local authority.

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These notes are intended as a guideline and should not be used as a substitute for proper professional advice. Please contact us and we will be happy to assist you.