Cost of owning a holiday home in Murcia, Spain
Local taxes are dependent upon each region. There are two local property taxes - these are applied by the local land registry. The cost is based upon the theoretical rental value and so will change according to inflation.
2) Local property tax
Otherwise known as Impuesto Sobre Bienes Immeubles (IBI), this is the main local property tax in Spain. Paid annually, IBI is based on the official value of the property in comparison to all properties in Spain. The percentage charged tends to be approximately 0.5% to 1% but, as with other local taxes, depends upon the region.
3) Local mains drainage and refuse collection tax
This tax is paid every 3 or 6 months and is known as basura y alcantarillado. Again, the amount is dependent upon the area in which the property resides, but tends to be between €200 and €250 a year. A further €18 is compulsory to pay if your property has a garage entrance.
4) Personal Taxes
When it comes to personal taxes, it is worth approaching a tax consultant, as each case is individual and costs vary considerably from person to person. Potentially, those who own properties in Spain but do not live in the property themselves could have to pay income tax, value added tax, wealth tax, capital gains tax and inheritance tax.
5) Income Tax
It is important to declare any income made on your rental property. If the property is sold on before you have owned it for a year then any profit is considered income, meaning you would be charged income tax on it. Income tax must also be paid on any rental money gained as this is viewed as an income.
If you spend more than 183 days a year in Spain then you are considered a resident. Residents are taxed dependent upon which income bracket they fall into. The lowest bracket is for those earning under €4000, who are currently taxed 15%, with the highest being those earning above €45,000 who are taxed 45%. If you are a non-resident the current tax rate is 35%. It is worth checking this at the time of renting your property as tax rates are prone to change.
6) Deemed rental income tax
If you are a non-resident and own a property which is neither your second residence nor rented out then you will be liable for the deemed rental income tax (rendimientos del capital immobilario). This will be based on the theoretical rate of rental for your property and you will be taxed 0.5% of this price.
7) Wealth Tax
Wealth tax, or ‘Patrimonial', is based on the value of your wealth, including value of property and the amount of savings you have. The value of the property is the price it was when you bought it.
The first €180,182 is not taxable for residents. The wealth tax increases the greater your wealth is, up to a 2.5% for those who have over €10,695,996. This scale is cumulative and so, for example, only the amount of money over €167,129 on a €300,000 property would be taxed at 0.3% (€167,129 being the limit of the 0.2% tax).
8) Capital Gains Tax
If you sell your property more than a year after buying it then you must pay capital gains tax (CGT) on the difference between the price you bought the property for and the price you are selling it at. Non-residents must pay 35% tax and residents pay 15%.
However, capital gains tax is given tax relief which means that the tax is actually considerably less than 35% and in some cases is none at all.
Non-residents are charged a retention tax of 5% when they sell their property. This is kept by the tax authorities until the capital gains tax is worked out. Then the retention tax is deducted from the CGT. If the CGT is more then the non-resident must pay the difference. If the CGT is less than the retention tax then the authorities will pay the non-resident back the difference.
9) Plusvalia
Plusvalia is a tax on the increase of value the land that the property is on makes. This is based on the area of the land and the value of the property itself. This tax varies hugely between different cases - from approximately £12 to £12,000 on properties which own a lot of land. Although it is legally the seller who should pay this tax, negotiation is common.
10) Inheritance Taxation
Beneficiaries must pay death duties in Spain, which could be anything from 15% to 50% of the value of the property. The exception to this is when a house if left by a deceased husband or wife to their partner, in which case a tax discount of 95% is allowed.
This article is brought to you by Connect Rentals the Murcia holiday rentals specialist for villas and apartments. 12.07.11
Source: http://www.properties-in-europe.com/info_spain_tax.htm
Date posted: 7 July 2011
