Property tax in Spain

Thanks to its warm climate, developed infrastructure and industry, Spain is an extremely attractive place to live and do business. Due to these advantages, many citizens are thinking about purchasing their own property in this country - residential or commercial. The state provides such an opportunity not only to citizens of the country, but also to foreigners, but potential buyers need to carefully calculate all costs. They consist of the value of the property itself and the property tax in Spain, which is called IBI.

Taxation of real estate in Spain

A fiscal fee of this type is levied on the person who is the owner of the object as of January 1 of the reporting year. Both residents (persons who live in Spain on a permanent basis) and non-residents can act as a taxpayer, but the tax rate for them is significantly different (non-residents will have to pay more). According to the current laws of this country, the tax rate varies between 0.4-1.1% of the cadastral value of housing. It is worth clarifying that the cadastral price is much less than the market price, so the amount of fiscal deductions is relatively small (especially when compared with other European countries).

Tax on the purchase of real estate

The amount that you will have to pay depends on the type of transaction with the object of residential or commercial purposes. The most common operation is the purchase of a house or apartment in Spain, in which case the owner will have to pay 2 taxes on the purchase of real estate in Spain. One of them is the local analogue of Russian VAT, it is 10% of the cost. Stamp duty is also levied on buyers of square meters in this country, its size, depending on the regional factor, varies between 0.5-1.5%.

It should be noted that when buying an object on the secondary market, the owner must pay a deduction for the transfer of property (ITP), the amount of which is 6-10%. In this case, the regional factor is also taken into account. As a confirmation, we can cite the size of the bet in different parts of the country:

• Valencia – 10%;
• Canary Islands -6.5%;
• Madrid – 6%;
• Catalonia - 10%.

In order not to make a mistake in calculating the amount, you can use the services of consultants.

The above are the deductions when buying a home for cash, but since square meters in this country are not cheap, most buyers have to take out a mortgage loan. A home buyer with a mortgage is faced with the following payments:

• Stamp duty (AJD, IAJD) is levied at the conclusion of a mortgage agreement, the fee is 0.1-2%.
• Independent assessment of the value of the object - on average, the amount of payment is 200-500 euros.
• Registration and notary fees – the amount of this payment depends on the loan amount.
• Insurance - this item is mandatory.

It is worth noting that the insurance premium is paid directly to the bank, which acts as an intermediary between the borrower and the insurer.

Taxes on the sale of real estate

If you own a house, apartment or house, then you may need to sell the property. Both ordinary citizens and developers can sell square meters. Neither one nor the other local analogue of VAT does not need to pay, however, as well as the property transfer tax. However, this does not mean that sellers are completely exempt from the fiscal burden.

The sale of square meters in Spain involves mandatory payment for capital gains. These are deductions for the difference between the sale and purchase prices, the amount of deductions is 19-24% of capital gains. The exact size of the bid depends on the difference between the buy and sell prices:

• up to 6 thousand euros – 19%;
• from 6 to 50 thousand euros - 21%;
• over 50 thousand euros - 24%.

It is worth noting that when selling real estate from non-residents, 3% is withheld by default to cover capital gains deductions. 

What taxes does the property owner pay?

The fiscal burden is provided not only when buying and selling, deductions must also be made by the owners of square meters.

In particular, they have to pay an annual municipal fee. Its rate is determined by local authorities, the amount of deductions depends on the cadastral value of the property. This tax is 0.4-1.1%.

If you already have your own housing, then you can make good money on it by renting, but you need to understand that renting a house in Spain also involves fiscal deductions. For non-residents, this tax is 24%, and for residents - 19%. Please note that it is charged on rental income, after deducting maintenance costs (utilities, maintenance costs of the elevator, swimming pool, green area).

What happens if you don't pay taxes?

In total, a rather impressive amount is collected, so some owners have a desire to save money by non-payment of taxes. Immediately it is necessary to warn against this, since tough measures will be immediately applied to the violator. In particular, for non-payment of taxes, the violator faces a large fine. The municipality can recover the missing amount in court by blocking the owner's bank card, in addition, the judicial authority may prohibit the taxpayer from making transactions for the purchase and sale of real estate in Spain.

If the debt has accumulated too large, then the property can be torn away from the owner in favor of the municipality. That is, you will not be able to save due to non-payment of taxes, you will only lose property. But disciplined taxpayers can count on a good profit due not only to rental income, but also due to the growth in the cost of square meters (real estate in Spain is considered a liquid asset, which is why it is often purchased for investment purposes). To get the maximum profit with minimal costs, it is recommended to contact specialists who will advise on the specifics of the tax legislation of this state.