05. July 2019 · Comments Off on Study: My Understanding of Realtors · Categories: Financial

The Tax Implications for Property Ownership in Spain

If you so happen to own property in Spain or are making plans for the purchase of one here, then it would be so wise of you to be aware of some of the tax implications that come with this, know of the tax liabilities that will be falling on you, both in the country Spain and even those in your home country if you happen not to be a resident in Spain. One thing that should be known is that these tax liabilities vary from one to another and is dependent on where you happen to be a tax resident and the things that you intend to use the property for. This is looking at the fact that you may have the property as a holiday home, one to rent out, an investment to be sold and as well you may be looking forward to using it as a future home.

Talking tax advice, the first thing that you need to know of is that there will be an initial purchase tax that will be applicable at the time of purchase. By and large, the applicable tax rates differ from one region to another but generally, they range between 6.5 and 8{130462d750e1c2598703525aecd0870f1d382bec9444705f8a828c0537223dcf}. However for the new properties that will be purchased from a developer, the ITP will not be payable but the Spanish IVA will be applicable which is applied at a rate of 8{130462d750e1c2598703525aecd0870f1d382bec9444705f8a828c0537223dcf}. However there are as well some of the areas, like in the Canary Islands where the IVA tax will not apply though you will have to pay a sales tax which is set at 5{130462d750e1c2598703525aecd0870f1d382bec9444705f8a828c0537223dcf} for the new properties bought from a developer.

One other aspect of taxation that should be known when it comes to making property purchases in Spain is the tax applicable on rental income. By and large, looking at this, from the outset it happens to be so important to know of this more so where you happen to be considering making the purchase of the property for investment needs i.e to let out. When it comes to this, one thing that is to be well understood is that the rental income will be taxable in Spain, whether you are a resident or not in so far as tax issues are concerned. For the non Spanish residents, the tax rate will be 24{130462d750e1c2598703525aecd0870f1d382bec9444705f8a828c0537223dcf} on the gross income. Your tenant will have the obligation of withholding the 24{130462d750e1c2598703525aecd0870f1d382bec9444705f8a828c0537223dcf} from the rent and have it passed to the Spanish tax authorities. If you are a Spanish resident, then you will be subject to pay the taxes on your incomes and rental incomes at the progressive rates of 24{130462d750e1c2598703525aecd0870f1d382bec9444705f8a828c0537223dcf} and 45{130462d750e1c2598703525aecd0870f1d382bec9444705f8a828c0537223dcf} for incomes on property, owned within and those from outside.

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