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Taxes as a Home Owner in Spain

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  • Taxes as a Home Owner in Spain

    SUMA & TAXES

    As a Home Owner in Spain, can you tell me what taxes I am liable to pay annually? And how can I pay them?

    There are two annual taxes which all Home Owners in Spain must pay:-

    1. Real Estate Tax (SUMA in this area)
    2. Individual Income Tax


    1. Real Estate Tax (SUMA or IBI or Council Tax)

    This is a local tax which the Council imposes on all property owners.

    All the property of each municipality is included in a census and a value is assigned; the land value or cadastral value. The tax is based on a tax scale established by the area, the land value, and the size of the property, including all components like the house, pool, garage, so if you have extended the property and the Council has not been informed, you should be aware you can be fined and certainly the situation must be sorted before you sell. If you need help with updating the legality of your property, please contact Ana on office@spanishsolutions.net and she will guide you.

    The notification for SUMA or IBI bill is posted out directly to the property for the previous calendar year, usually paid by early October of the following year. Now is the time you should be receiving the bills. If on direct debit, you need do nothing. If you have not set up a direct debit, then the notification has a slip at the bottom and should then be taken to be paid at any of the participating banks.

    If you have not been paying this SUMA or IBI bill, we urge you to contact us to get up to date, as at some stage an embargo on your car, or your bank account, or your house will appear.

    2. Income Tax (Individual income tax or Non-Resident tax)

    Calculation and payment of the Individual Income Tax can be a complicated business. Individuals are deemed as Residents if they meet any of these conditions:-

    - they spend more than 183 days per calendar year in Spain
    - their main place of business is indirectly or directly located in Spain

    Residents are taxed on worldwide income. If you think you should be making Resident tax Returns, please contact Poli on info@spanishsolutions.net for an appointment.

    Non-Resident tax is the commonly used term for the tax on Non-resident Spanish property owners. Many people do not realise that regardless of whether or not their property in Spain is rented out, they have to pay tax individually each year.

    When a property is owned by a married couple or various different people, each person listed on the Title Deeds is defined as an independent tax payer, which means that an individual tax return must be separately filed by each of the co-owners.

    If the property is only used by the owner and not let, the tax is based on an estimated income of the property┬┤s cadastral value. The Return has to be presented and paid by 31st December each year, for the previous calendar year, so a year in arrears. If the property is rented out, this tax is payable, but also a separate tax based on rental income.

    If you have never paid Non Resident Tax and need some advice, please contact Poli on info@spanisholutions.net You may find that to put things right does not cost as much as you may imagine, and will save you many a sleepless night when you realise that eventually non-payment of these legal obligations will cause problems.


    3. Property Tax (Wealth Tax)

    For those of you that remember Wealth tax, and many people still mention it, this was abolished in 2009, then re-introduced temporarily for 2012 and 2013 and has now been abolished again, so please do not worry about that one.

    Some people say well my neighbour has never paid non-resident taxes and not been caught. We would advise that is irrelevant, they may be tomorrow, and they may be sorry that they did not comply with the law regarding taxes in Spain, and saying that they were unaware is not accepted as an excuse.

    Spanish Solutions can provide Fiscal Advice, Assistance and Representation with all of these taxes. Please contact the office directly on 966 761 741 for further information.
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