Property Taxes

Property for own use

Form 210 Filing period: January 1 - June 20 of the following year. (Form 214 is the single form for declaring both property tax and income tax, with the filing period any time during the following year.)

The income to be declared is a percentage of the cadastral value of the property, as indicated on your property tax receipt. It is 2%, or 1.1% if the property's cadastral value was revised after January 1, 1994. The tax rate is then 25% of this "income". If you didn't own the property for the entire year or if it was rented for part of the year, then you would prorate the amount accordingly. Note that the rules regarding this tax were modified significantly on March 1, 2004.

A nonresident whose only taxable property in Spain is a dwelling fundamentally for own use may elect to use a single form for declaring both property tax and personal income tax on the estimated income from the use of that dwelling.

Property Taxes

An annual real estate tax is payable to the local municipality. The tax is based upon a percentage of the cadastral value of the property. Typically the tax rate is 0.4% on urban properties and 0.3% on rural properties. Municipalities may, within certain limits, increase or decrease these rates.

If there is a change in land title a municipal tax (‘land appreciation tax’ or ‘Plus Valia’) is raised based upon the increase in value of the land since it was last sold. The rate is set by the Municipality and varies depending upon where the land is situated, the population of the municipality and the length of time since the preceding transfer.

Stamp Duty/Transfer Tax

The general rate of Stamp Duty/Transfer tax is 6%-7% (depending upon the Autonomous Community) on ‘second hand’ property transactions. Lower rates apply to the acquisition of other assets. Documentary stamp duty is typically 0.5%.

Sales Tax

Sales tax (IVA) of 16% is generally added to the sale price of goods. Some sales are exempt from sales tax or taxable at a reduced rate. With regard to ‘new build’ properties a sales tax of 7% is charged in place of a transfer tax.

Property used for rental

Form 210 for ordinary return, using general section 210-A and indicating income type 01. Filing period for Form 210: one month after the date on which the rent is due. Form 215 for collective return. Also indicate income type 01. Filing period for Form 215 (filed for each quarter): In the first 20 days of the month following the end of the quarter.

The income to be declared in this case is the total amount collected from the tenant, without deducting any expenses. The tax rate is 25% of this income. This income is chargeable when it is claimable from the tenant or when it is collected (if earlier). Each rent due is taxed separately and, consequently, a return must be filed for each rent due. Or, collective returns may be filed which may include various chargeable income of one or more taxpayers falling within a calendar quarter.

A tax form must be sent after the termination of every rental agreement, in addition to the yearly declaration of income.

Residents and nonresidents: Capital gains on the sale of property

Form 212. When the property being transferred is owned jointly by a married couple in which both spouses are nonresidents, a single return may be filed. Filing period: three months from the end of the period in which the purchaser of the property must pay the withholding tax (which is one month from the date of the sale).

Capital gains on the sale of property are taxable income that must appear on your income tax form for both residents and nonresidents. This income is chargeable when the capital gain takes place. The gain is generally the difference between the sale and purchase values. The purchase value is the purchase amount plus the expenses and taxes paid that were involved in the purchase.

The sale value is the sale amount minus the expenses and taxes that were paid. If the property has been rented, the purchase amount must be reduced by the amount of depreciation corresponding to the rental period. The depreciation is also updated on the basis of the year in question. However, if the property being sold was acquired before December 31, 1994, this capital gain gets reduced by 11.11% per year for each year (above two) during which the asset was held. This holding period is calculated by taking the number of years between the date of acquisition and December 31, 1996 and rounding up.

Withholding tax:

If the seller is nonresident, then the buyer must withhold 3% of the agreed price (regardless of whether the buyer is resident or not), using Form 211 to pay this 3% to the tax office. The buyer then provides the nonresident seller with a copy of the form, so that the seller may deduct this withholding from the tax payable in the return declaring the capital gain. If the amount withheld exceeds tax payable, the excess is refundable.

If the tax withheld is not paid, the liability for the tax is attached to the property.

Nonresidents: Additional property tax

Form 714, the same as for resident taxpayers Filing period: May 1 - June 20 of the following year. Nonresidents must file this tax form if they own property in Spain on December 31 of each year, regardless of the value of the property. The tax is calculated based on the highest of the following three values:

The cadastral value, as reflected in the property tax receipt for the year to which the return refers.

The value assessed by the Spanish Tax Office for purposes of other taxes.

The purchase price.

The taxable amount is based on the value plus any charges or liens on the property minus the mortgage the property has, if any. Each individual must file a separate return; if a property is owned by a married couple or by various persons, each one of them must file a single return for the portion of the house owned (usually 50%).