Every owner must pay taxes on real estate in Spain and on income from renting out the property, even if he is not a tax resident of this country.
Some taxes are paid by all homeowners, regardless of whether the property is rented or vacant. Another part of the taxes is paid only when renting out real estate in Spain. An important role is also played by whether the foreigner is a resident of Spain, as well as the citizenship of the owner: for Spanish citizens and EU taxes when renting out housing are lower than, for example, for Russians or Ukrainians.
Let’s talk about the taxes that owners pay when owning and renting out real estate, but first let us remind you who is considered a tax resident in Spain and who is not.
Tax residents in Spain are considered to be those individuals who permanently reside in the country, that is, one of the following conditions is met in their respect:
- An individual stays in Spain for more than 183 days during a calendar year.
- The main economic interests of an individual are concentrated in Spain.
- The center of vital interests of an individual is located in Spain (his spouse or minor children who are dependent on him permanently live here).
If none of the above conditions are met, the individual is considered a tax non-resident in Spain.
Annual municipal property tax (IBI)
The rate of this tax is 0.4%-1.1% of the cadastral value of housing, depending on the autonomous community.
This tax is obligatory for both residents and non-residents. Real estate taxes must be paid regardless of whether the property is rented or you live in it personally.
The tax rate depends on the region and type of municipality. It is calculated as 0.4% -1.1% of the cadastral value if the housing is located in an urban area, and from 0.3% to 0.9% in rural areas.
This tax is paid once a year. In case of resale of an object, the tax is paid by the owner who owned the property at the time of January 1 of the current year.
If the property is rented out, the tenant usually does not pay IBI. However, in case long term rentals in Spain the owner of the property can reach an agreement with the tenant and assign the payment of the tax to him.
Most property owners in Spain pay this tax in the amount of 250-750 euros per year per property. IBI is automatically debited from your bank account.
Income tax for non-residents (IRNR)
It is 24% of 2% of the cadastral value or the amount of rental income.
The IRNR must be paid by the property owner who is a non-resident of Spain. Depending on whether the owner rents out the property or passively owns it, the tax is calculated differently.
If the owner rents out the property, the tax will be 24% on rental income. When receiving rental income, you must submit a declaration quarterly: by the 20th of April, July, October and January.
If the owner of the property does not rent out the property, then he is credited with income from its ownership in the amount of 2% of the cadastral value of the property. the tax rate in this case is 24%. Thus, the tax is calculated as 24% of 2% of the cadastral value of the property, which in fact is 0.0048% of the cadastral value.
For example, the cadastral value of an apartment is 70,000 euros. The INRR calculation in this case will be as follows:
70 000 €*0,2=1400 €
1400*0.24 = 336 €/year
If during the year the owner rented out the property for some time and lived in it the rest of the time, or the property was empty, the total amount of tax is taken into account: 24% of rental income + 0.0048% of the cadastral value for the remaining days.
In any case, when the owner intends to rent out his property, he can consult a lawyer or intermediary company. They will help you optimize taxation and suggest the most profitable payment option.
In our company you can order a management service for your facility. Find out more about the property rental service in Spain here:
Tourist tax IEET (Tasa Turistika)
In some regions of Spain, for example in Barcelona or the resorts of the Costa Brava, you must also pay IEET – tourist tax. This tax is paid by tourists. To settle IEET, homeowners file Form 950 every six months.
This tax depends on the type of accommodation and location of the property. For example, in Barcelona the rate is 2.25 euros per person, while in the rest of Catalonia it is 0.90 euros. The tax is paid only for the first 7 days of stay.
In addition to taxes, you need to take into account the additional costs of maintaining the property, which will affect the final profit from its rental. These are community fees, electricity, water and gas bills, waste disposal tax and insurance. If the owner rents out real estate in Spain through a management company, then it is worth deducting a fee for its services – 10-25% of rental income. Learn more about additional costs real estate in Spain we will tell you in the next article.
