non-resident wealth tax

[elbromista]

Tax

Hi Chris - yeah Stuart here - could not log in with rojo despite changing password so had to create another - Pedro the IBI is issued on the property - regards If you need any help or details filling in the form or the envelope drop me line

[burgatia]

WEALTH TAX

Excuse my ignorance but Im new to spain. What is wealth tax. I have just purchased 2 apartment in Algorfa. Do I have to pay wealth tax on them or is it only if you rent them out?

[Doc]

Hi Burgatia.

As a property owner there are various taxes you have to pay.

Wealth tax - this is an annual tax based on your 'wealth', and is calculated on the value of your property (less any outstanding mortgage capital).

Renta - this is an annual tax (paid alongside your wealth tax) based on the value of your property. This has to be paid because the Spanish government assumes that you will earn rental income on your home in Spain, whether or not you actually do. This must only be paid if you are non-resident in Spain. This tax is either currently being, or about to be, challenged in the European Courts as it is deemed to be unfair and discriminatory, as it does not have to be paid in any other EU country. However, until it is quashed it must be paid.

IBI - this is the equivalent of the UK council tax, although a lot cheaper!

If your apartment is a new build you are unlikely to get an IBI bill for a couple of years as it is based on something called a Cadastral Value (similar to rateable value in the UK), and it takes a while for the local authorities to calculate this value. Until they do, you won't get a bill. The remaining taxes must be paid for the current year in the following year. I.e. if you bought this year (2006), your 2006 taxes will be due by the end of 2007. For your first year of ownership you only have to pay pro-rata for the number of days that you have owned the property, and then full years thereafter.

Hope this helps,

Chris.