TAXES AND FINANCIAL ADVICE
If you own a house or property in Spain, you are obliged to pay taxes here. You must pay an annual property tax (IBI) and a non-resident tax, which are based on the assigned value of your property. At Desmon Abogados, we offer legal and fiscal services which will allow you to forget the worries of calculating, filing and paying these taxes.
A.- Local Property Tax (IBI)
What is “IBI”?
This is a tax which property owners must pay to their local Town Hall.
How to get it?
All the properties located in each municipality are listed in a census, and assigned a value (Assessed Value). The amount of tax you must pay is calculated by applying a percentage of the value assigned to your property by the Town Hall.
How to make the IBI payment?
In general, you are allowed to pay this tax through direct debit, which facilitates payment within the allotted time, and avoids possible surcharges and fines. The normal payment period is from September to November, although there could be variations, depending on the municipality
B.- Non- Resident Tax (IRNR):
Are you an owner in Spain but not a resident?
If you do not reside in Spain, you must file a tax return on the properties you own in this country, before the 31st of December every year, no matter the value of your properties. We will contact you with enough time to prepare all the necessary documents and submit your tax return on your behalf.
Moreover, every individual must present a tax return. This means, for example, if a house belongs to a married couple, or various people, each one must file a seperate tax return, where the percentage of their ownership is reflected.
C.- Income Tax (IRPF)
The first thing to be established is whether you are a resident or not. To do this, the number of days you reside in this country is crucial. If you spend 183 days a year or more in Spain, you are considered to be a fiscal resident.
If you are a fiscal resident, you must pay income tax in Spain. This applies both whether you earn income here, or if you do not. Spain has a fiscal exemption on foreign earnings, but this can only be applied if you have already paid taxes on this amount, and it was earned from work physically carried out in another country.
D.- Proporty Rentals:
Is your property in Spain rented?
We remind you that if you are renting out your property in Spain, you must determine whether you have gained a profit from this rental. This must be done every three months. If this is the case, you must pay a tax on this profit. If the quarterly result is negative and there are losses, it is only necessary to file an annual tax return in January, justifying the earnings and expenses of this property during the previous year.
E.- Capital Gains Tax
¿Eres propietario en España pero no residente?
If you do not reside in Spain, and you sell your property here, you will have to pay a capital gains tax. The profits or losses associated with the sale will be calculated by subtracting the acquisition costs plus expenses, from the amount earned from the sale. Our accountants can calculate this for you, to facilitate the payment of this tax.
F.- Plusvalia Tax
Finally, a local tax, collected by the Town Hall, will have to be paid. This tax is based on the increase in the land value of your property.
The amount of this tax depends on the municipality and the length of time you have owned your property. Every Town Hall applies a percentage of the land value, which can vary from 20% to 30%. If you decide to sell your property, the cost of this tax can be included as an expense, and therefore lower the amount of capital gains tax you are required to pay.