Property Related Tax

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

1.

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 were equalised from 1st January 2007 onwards. Click here to view the current tax rates.

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 210, within a further two months.


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2.

Sale of Spanish property by residents

Click here to view the current tax rates.


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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3.

Taxation of Spanish rental income of non-residents

Rental income is taxable at the following rates:


Citizens/ residents of EU countries, Iceland and Norway 19%
Others 24%


For EU Citizens, all rental expenditure (including mortgage interest) is tax deductible. For non-EU Citizens, there are no allowable tax deductions and the entire rental income received is taxable. This must be declared by submitting Form 210.

For non-rented properties an annual tax return, Form 210, must also be submitted. Please click here for further details.


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4.

Wealth Tax- Impuesto Sobre el Patrimonio

After having been previously abolished in Spain on 1st January 2009, Wealth Tax then re-introduced on a temporary basis for the years 2012 and 2013, and then again from 2015 onwards.

The intention of the Government is to abolish this tax again from 2017 onwards, however given their past actions one cannot be sure what to expect ! The current tax-free allowance for non-residents is 700k Euros.


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5.

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.


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6.

Transfer tax on purchase of Spanish property- Impuesto sobre Transmisiones Patrimoniales (ITP)

This is payable in situations where there is no VAT (e.g. purchase of a second hand property). The rate depends on the area of Spain (Comunidad Autónoma).


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7.

Plusvalía municipal (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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