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Spanish property tax cover

Property Tax in Spain (a starter guide)

Navigating the local terrain when doing any real estate operation is not easy. Especially when Spain isn’t your country of birth.

With this guide, we wish to give you a quick overview of all taxes associated with property in Spain. During the purchase, sale, ownership, or rental of a property, different taxes are applicable. Also, it matters if you’re residing in Spain and which use you’re giving to your property.

Please note that this post is intended for informational purposes only and should not be construed as legal advice. It is highly recommended that you consult with a qualified lawyer before proceeding with any real estate transaction.

Let’s dive right in!

This Post at a Glimpse

Property tax in Spain during purchase

  • New home purchase: During the purchase of a new home, you’ll have to pay VAT of 10% on the purchase price + stamp duty which is between 0,5%-1,5% depending on the autonomous community.
 

Post of interest: Antares Barcelona

 

  • Used home purchase: You’ll have to pay the transfer tax when purchasing a resale home known as ITP (Impuesto sobre la transmisión de bienes patrimoniales). This tax is a fixed percentage on the price of the property.  The percentage varies according to the region in Spain you’re buying in it can be as low as 4% or as high as 10%.
    As a general rule, the ITP payment for most autonomous communities in Spain is 8%. Please note though that in some autonomous communities, the ITP has been raised. For example, in Barcelona, which is a part of Catalonia, you’ll pay 10% of the purchase price for properties under a million, and 11% for more expensive properties.

 

 

  • Cadastral reference value: In 2022 the Spanish government decided to give each property a monetary value (you can find this value in the Cadastre). This value is normally different from the current market value. If the cadastral reference value is higher than the closing price you’ve agreed with the seller, you’ll pay ITP on this value instead of the former. Be sure to find out what the cadastral reference value for your property is!

 

 

  • Vendor’s tax retention if they are NON-residents: If the sellers of the property you’re purchasing are non-Spanish residents, the Spanish government tasks the buyer to retain the amount that is supposed to be paid by the seller. The amount that the buyer will have to withhold is 3% of the total purchase price. Important to note that this 3% does not cover the plusvalía tax which should also be covered by the vendor. If  this scenario happens to you we highly recommend you hire a real estate lawyer to help you complete the operation.


Post of interest: How to buy an apartment in Barcelona (a 10 step guide)

"find out what the cadastral reference value for your property is, before buying!"

Taxes to pay after a property sale

  • Capital gains tax: When selling a property the vendor will need to pay taxes on the profit made on the operation, once all expenses and deductions have been taken into account. As an example, if you bought at 500.000€ and sell at 600.000€ but had expenses for 50.000€, you’ll have to pay taxes on the remaining 50.000€.

    According to the amount of profit you make with your property sale, you’ll pay the following percentages:
      • Up to 6.000€, you pay 19%
      • Between 6000€ and 50.000€ you pay 21%
      • Between 50.000€ and 200.000€ you pay 23%
      • Over 200.000€ you pay 26%

     

Keep in mind that you can progressively apply these percentages. Meaning you pay 19% on the first 6.000€, 21% from 6.000€ to 50.000€ and so on.


*Pro tip: You can avoid this tax if the property you sold was your permanent residence, and you re-invest the totality of the sale in another permanent residence.

 

    • Plusvalía (municipal): The plusvalía is a municipal tax, which takes into account the increase of value, of the land the property is built on. The value of the land over time is determined by the government. The seller will pay tax on the amount the land has increased in value, between the time of purchase and the time of sale. For an example of a plusvalía calculator please follow this link (keep in mind that the result from the calculator will only be an approximate one).

 

  • Municipal property tax (IBI): This tax further explained down below, will have to be paid by the vendor and buyer. Each will cover the amount corresponding to the time of the year they held the title of the property.


Post of interest: How to sell your flat in Barcelona (in 10 easy steps)

spanish property tax purchase

Taxes during property ownership

  • Municipal property tax (IBI): The IBI (Impuesto sobre bienes inmuebles in Spanish) is the municipal tax charged to the title holder of any property. The tax base is the cadastral value of the property (this value can be found on the cédula de habitabilidad of the property). This cadastral value is then multiplied by the locally established multiplier, which can be anything between 0,4% and 1,2% depending on the municipality. It is charged yearly, although it can also be paid quarterly. It will be common to pay between 200€ and 1000€ per year, depending on the city and area the property is located.

  • Municipal utility tax: These taxes are very common but not applicable in all of Spain. They are paid to cover things like garbage disposal or municipal water.

  • Non-residents tax: This tax only applies if you are a non-resident who owns one property for personal use (meaning the property is not rented out). The tax base will be 2% of the cadastral value of the property or 1.1% if this value has been revised in the last 10 years. The tax rate on the resulting value will be 19% for EU members and 24% for everybody else.

  • Spanish wealth tax for non-residents: The tax applies to the net value of your assets located in Spain, including any property you own. If the net value of your assets exceeds 700,000€, you’ll have to pay the tax, with rates ranging from 0.2% up 2.5%.

Taxes on property rental

Taxes when renting out residential property

  • Long-term rental contracts: When renting out your property on a long-term contract (5 years + extensions if you’re a physical person and 7 years + extensions if you’re a corporation) you’ll have to pay taxes on the net profit earned over the year. So the tax base will be total rental income, minus costs. Also, for long-term contracts, you get a 60% tax deduction on your tax base. Finally, the tax rate will depend on your total Spanish income.
    Example: if you’ve earned 24.000€ in rental income minus 6.000€ in costs, this gives you an 18.000€ tax base. To this, we apply the 60% deduction which leaves us with 7.200€. If this is your only income it would be located in the 19% tax bracket, for a total tax payment of: 1.368€

  • Short-term rental contracts: If you’ve decided to rent out your apartment for shorter periods (anything between 32 days to 11 months), the tax calculation is very similar to the previous one. But you don’t get the 60% tax deduction. The main difference between short and long-term contracts is, that the short-term rental cannot be the permanent residence of the tenant. Example: 24.000€ rental income minus 6.000€ costs = 18.000€. If this is your only income it will locate you in the 24% tax bracket, for a total tax payment of: 4.320€.

Post of interest: My tenant isn’t paying rent, what to do?
"short or long-term contracts? Different taxes!"

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