Taxes on residential property in Spain

Below we provide a quick guide to the main taxes payable on Spanish property. At the foot of the page you will also find a guide to Spanish income tax rates. All sums are shown in euros.

• Capital gains on sale of Spanish property

Spanish residents currently only pay capital gains tax on assets in Spain.

•  Sale of property by non-residents

A 35% capital gains tax is payable (see additional notes below). A 5% withholding tax is applicable if the property was purchased after 1986. This ensures that tax on sale is paid by non-residents. This is being revised downwards in 2007.

•  Capital gains and losses – Ganancias y perdidas patrimoniales

The capital gain equals the registered transfer price less the registered purchase price. If the property is held for less than one year it must be included in your taxable income. If the asset is held for more than one year then the gain is taxed at 15%.

For non-residents, the flat tax rate is 35% and for residents the tax rate is 15%.

Rollover relief

This is for the proceeds of a sale that are subsequently reinvested within two years in another main residence – the sale must be declared on the tax return. To qualify you must have lived in the property for a minimum of three years, or have sold because of changing circumstances such as job, marriage, or separation, etc. The gain is deferred and will be taxed on the eventual sale of the newly purchased property.

Absolute relief

This is for resident taxpayers over 65. They must have lived in the property for a minimum of three years.

• Wealth tax – Impuesto sobre el patrimonio

The first €108 132 is tax-free for residents. In addition, residents enjoy an exemption of €150 293 on the value of the principal home.

After this:-

 0 - €167 129 is taxed at 0.2% =                      €334

 €167 129 - €334 247 is taxed at 0.3% =         €836

• Local property tax – Impuesto sobre buenes inmuebles (ibi)  

An annual tax based on the rateable value of the property. Rates vary between different local authorities but are usually between 0.5% - 1%.

• Local tax on mains drainage/refuse collection – Basura y alcantarillado

An annual tax payable by property owners with these services.

•  Transfer tax on purchase of Spanish property – ITP

Some 7% of the declared value is payable when buying a property (see our FAQ on how much to declare on the deeds – or escritura). This is payable in all situations where there is no VAT (IVA) payable e.g. a property resale.

•  Land appreciation tax –  Plusvalia

This is payable by the vendor. The rate is established by the relevant local authority.

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Notes on Spanish income tax

• Personal tax rates

Earnings 0- €4000 (combined) =                      15%

Earnings €4000 - €13 800 (combined) =          24%

Earnings €13 800 - €25 800 (combined) =       28%

Earnings €25 800 - €45 000 (combined) =       37%

Earnings €45 000 (combined) =                        45%

• Personal allowances – Minimo personal

A general personal allowance of:                €3400 p.a.

Age 65+ personal allowance of:                  €4200 p.a.

Age 75+ personal allowance of:                  €5200 p.a.

Disability allowances are between €2000- €6200 per annum depending on the type and severity of the disability.

• Child allowances:

First child:                                                  €1400 p.a.

Second child:                                              €1500 p.a.

Third child:                                                 €2200 p.a.

Fourth child:                                               €2300 p.a.

An elderly relative living with family whose annual income is less than €8000 per annum.

Age 65+ allowance of €800 p.a.

Age 75+ allowance of €1000 p.a.

• Maternity allowance – Reducción por cuidado de hijos

€1200 per annum per child for working mothers with children under the age of three.

• Earnings related personal allowance (for employees)

Earnings not more than €8200          €3500  

Earnings between €8200 - €13 000   €2700

Earnings €13 000+                             €2400

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We are estate agents, not accountants, so while we believe this information to be correct we cannot accept any responsibility for errors or omissions.

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For more information on Valencia and our range of property go to:

www.rawlinsholden.co.uk or in Spanish at www.rhinmobiliaria.com

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