Buying Selling Info in , Orihuela Costa, Costa Blanca, Spain
Property Owners Imputed Income Tax
Even if you are not renting out your property you are obliged to pay a tax.
This is calculated at two per cent of the fiscal value and you pay 25 per cent tax on this every year. Spanish Residents are exempt from this tax.
For example you own a property which has a Valor Castastral of €180,000 and its real value is €230.000, this is assuming the property is in joint names, the tax agency imputes them separately, each sharing the Valor Catastral of €180,00 which gives each €90,000. The tax is then worked out at 2% of €90,000 which equals to €1,800, you then tax this figure at 25% which comes to €900.00 When it comes to selling your property and you are a non-resident, there is a tax of 35% Capital Gains Tax. This is charged on your Escritua (Title Deeds) at the old Escritura price and the sales Escritura.
There is also a withholding charge of 5% of the total price which is paid directly to the Spanish Tax Agency, making sure that the Seller does not take the money and run. This will be refunded if overpaid, thus acting as a guarantee for your CGT payment. Capital gains tax for Spanish Residents is now 15 per cent, this is calculated as part of their Spanish Income Tax.
If you are buying another property, you will get relief from this tax, so long as this is your main residence. To qualify, you must have lived in your home for 3 years Wealth Tax If you are a resident in Spain the Spanish Tax System also charges a Wealth Tax ‘Patrimonio’ based on your assets World Wide. This includes property, shares, bonds, car, bank accounts.
A husband and wife have an exemption of €108,182, both have to make an individual declaration. If the asset is the main residence then there is an exemption of €150,253. For example if wife and husband have joint ownership, then there is no ‘Patrimonio’ to pay.
As this is a complicated system it is advisable to seek a Lawyer or Gestor, to give you the latest information Annual Real Estate Tax (IBI) This tax is based on your Valor Catastral, and can vary from town to town. IBI stands for Impuesto sobre Bienes Inmuebles. This tax rises each year due to inflation.
There is no escaping this tax, the Hacienda will check the books at the time of the property sale. As the tax will be holding the 5 per cent withholding fee, any taxes owed as well as CTG will be deducted N.I.E. Numero de identificacion de Extranjero is a tax identification number, which identifies you to the Spanish tax authorities. This number is needed for tax purposes in Spain, this applies to residents and those who own a property in Spain but do not live in Spain permanently.
You cannot purchase a house without an N.I.E. number, and should apply for this number when you purchase your property in Spain. Your N.I.E. number is required when you pay your taxes or have any dealings with Hacienda. You can go to your local police station to apply, Alicante or Elche. If you go to Alicante and wait a few hours, you can have your N.I.E. on the same day, at other areas there is a few weeks wait. It is best to take a translator with you or a Gestoria. You will need photocopies of your passport as well as taking your original passport with you, plus 2 photographs and the completed N.I.E. form.
This is a very important document and should be kept in a safe place, take several copies for emergencies, always keep one in your car along with a copy of your passport, just in case you break down or are stopped by the ‘Local Guardia’