Tax Guide For Property Owners In Spain
This is a short guide to tax information that property owners and potential property owners in Spain need to be aware of. Property owners in Spain are required to pay property tax and income tax, which includes capital gains. Non-resident property owners who have property in Spain but live overseas must pay the same on top of a special non-resident property tax.
Of course, only income tax earned off the property non-residents own is calculated in Spain. All other income tax is dealt with in the home country of the non-resident. Your income tax declaration will depend on how much of the property, if any, you rent.
Paying Personal Income Tax on Property in Spain
When a property has several owners, the taxes of each individual are still separate, even if the owners are married. Returns must be filed for each person. If the property is for personal use, you will require a Form 210, which you will file between the 1st of January and the 20th of June the year after the income was earned. You can also file a Form 214, which handles both income and property tax and can be filed at any point in the year after you earned the income.
If you use your property in Spain as a rental, you will file a Form 210, on which you will declare your income in section 210-A. You have to file this 1 month after the rent comes due. You can also file Form 215 for a collective return, which has to be filed within the 20 days following each quarter. Tax is 25% of the gross rent collected. You must also file a return whenever a rental agreement ends.
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Capital Gains on Property Sale for Both Residents and Non-Residents
You must file a Form 212 when you sell a property in Spain. If a married couple owns the property and they are both non-residents, they can file jointly within four months of the sale. The capital gains both residents and non-residents are taxed on is the difference between the amount paid for the property by the seller and the amount paid to the seller upon sale. Depreciation must be calculated for time periods during which the property was rented.
If you purchased the property you are selling before December 31 of 1994, the capital gain decreases by 11.11% for every year past two years that you owned the property. If you are selling a property as a non-resident, the person purchasing the property must pay 5% of the cost of the house as taxes. You will not receive this portion of the price.
Property Tax for Non-Residents
Non-residents must file a Form 714 every year between May 1 and June 20 if they owned property in Spain on the last day of the previous year. It does not matter how much the property is worth. The form must be filed. If you own the property with another individual, you only have to pay taxes on the percentage of the property you own. For example, if you are one of four owners, you will pay 25%. Nonetheless, you and the other owners must file separate forms.
The taxes each non-resident owner of the property pays will be based on whichever of the following has the highest value: the cadastral value, the Spanish Tax Office assessment value or the amount you paid for the property. Any liens or charges against the property will be added and any mortgage will be subtracted.