As the owner of a second residence in Spain, you pay a number of taxes every year. This article gives you an overview of the different taxes on a second residence in Spain.
The IBI (impuestos sobre bienes inmuebles) is an annual municipal property tax. You can compare this tax to the property tax in Flanders. The IBI is calculated based on the cadastral value of the property (valor catastral).
The owner or usufructuary of the property owes the tax from the 1st of January. For example, if you bought a second residence in April 2020, you will therefore have to pay the municipal tax only from 1 January 2021. In practice, however, this tax is settled pro rata at the time of the purchase deed.
The municipality collects this tax. In the province of Alicante, the SUMA collects the IBI. You will receive the assessment annually in the period August - November. You can have the IBI domiciled through your Spanish bank account.
The non-resident tax
As the owner of a second residence in Spain, you are a non-resident in Spain. This means that you must also file an annual non-resident declaration (impuesto sobre la Renta de no Residentes sin establecimiento permanente). This non-resident tax is similar to the Belgian non-resident tax. The calculation differs depending on whether you rent or not.
You do not rent
If you do not rent out your second residence, you will be taxed on cadastral income. The cadastral income is a percentage of the cadastral value. As a rule, cadastral income is 2% of the cadastral value. If the cadastral value was revised in the last 10 years, the percentage is only 1.1%.
The cadastral value is recorded by the local tax office. You will find this amount in the IBI statement. If you have bought a newly built property, there is usually no cadastral value available yet. You will then take 50% of the value in the deed.
On cadastral income, as an EU resident, you will be taxed at a rate of 19%.
An example. The valor catastral of your property is 100,000 euros. This cadastral value was revised 8 years ago. The cadastral income is then 1.1% of 100,000 euros or 1,100 euros. On the cadastral, you take the rate of 19%. You will then pay 209 euros for non-resident tax.
You should declare the tax annually, before the 31st of December, using the form modelo 210. If you are reluctant to file your tax return yourself, Confianz can help you do it arranging formalities for you.
You rent out your second residence
If you want your holiday home leases, you pay 19% on the net rental income. This means that you are allowed to deduct expenses from your gross rental income, such as community charges, water, electricity, maintenance, municipal charges and taxes, depreciation, etc. This cost deduction is calculated pro rata on the number of rental days in the calendar year. You are responsible for quarterly declare the tax: by 20 April, 20, July, 20 October and 20 January.
What if you only rent for a few months a year?
In that case, you need to file multiple returns. The quarterly declaration for the period during which you rented out the property. In addition, the annual declaration based on the cadastral income, calculated proportionally to the number of non-rented days.
An example. You rent during the months of July and August 2020. In May and October, you stay in your Spanish property yourself. You should then declare your rental income by 20 October 2020. For the remaining periods of the year 2020, you file a declaration before 31 December 2021.
Non-residents also pay wealth tax on their assets in Spain. As a rule, there is an exemption for the first 700,000 euros per person. For assets above 700,000 euros, there are rates between 0.20% and 2.5%.
Update December 2020: the highest rate will be raised to 3.50% for net assets above €10 million nationally from 2021.
Other taxes depend on the municipality. For example, in addition to IBI, there may also be waste tax (basura). The basura however, can also be charged in the water bill.
What about Belgian taxes on property abroad?
In Belgium, you have to declare the gross rental value in your personal income tax return. Even if you do not rent out.
However, from assessment year 2022, there will be a foreign KI. You will then have to pass on the sales value of your property to the Belgian land register. This sales value will then be recalculated to 1975. The KI on this will be 5.30%. More information on the foreign KI.
What about Dutch taxes on property abroad?
Residents of the Netherlands should declare the sales value of their foreign property for income tax purposes. This is box 3 for income from savings and investments. This is followed by a partial exemption.
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Update: June 2022