We strongly recommend that you read our FAQs to clarify your doubts. Here you will find a summary with the most common issues in the process of handling, declaration and payment of taxes. Please read it carefully to avoid problems, surcharges and penalties by the Tax Agency.
In this blog entry we will tell you about the different sections of your IBI receipt (Impuesto sobre Bienes Inmuebles [Property Tax]) and also where to find them so that you may manage your taxes with us in an easy way.
Very often the Property Tax (IBI) is mistaken by the Non-resident Legal Person Income Tax (IRPFNR) and many owners think that both are the same tax and that paying one of them (usually the Property Tax) is enough to keep their taxation settled in Spain. In this article we are going to explain in a practical (not legal) language the differences between each tax. However, remember that you must always check on your specific case, as besides this tax you might also be required to declare the Wealth Tax (Impuesto sobre el Patrimonio) or other taxes.
Many non-resident owners of real estate property in Spain are worried about the implementation of this new tax which is supposed to be a temporary one and addressed to large fortunes.
Even though this tax has been very recently approved, in this article we may be able to provide a brief overview of its configuration.
Our office provides the services of tax calculation and handling tax return statement for non-residents. However, we do not act as tax representatives.
In general terms and with the exclusion of some exceptional cases, you are considered a tax resident when you spend more than 183 days in Spain.
Broadly speaking, for the owners of real estate in Spain there are three main types:
- Imputation of income: it would be the statement as owner or holder of land rights on one or several real estate properties in Spain (without renting).
- The real estate capital gains (which would be the rents of the building without provision of accommodation services).
- The capital profit and loss statement (which occurs when selling the property).
These types are compatible with each other.
Yes. Owning a property in Spain means that you are subject to the property income imputation system and therefore you must declare ownership of such property. And not only that, if you happen to rent out some quarter, you will have to declare the attributed income for the rest of the year based on the cadastral value. That is, submitting your quarterly statement to declare the rents obtained will not be enough, and you will have to declare the attributed income just for the mere fact of having the property in Spain for the rest of the year.
The tax rate is 19% for residents in the EU, Iceland and Norway, on the profits, and 24% for the rest of taxpayers (e.g. residents in USA, UK, etc.) on the income because according to the current regulation deducting expenses is not allowed.
Residents in the EU, Iceland or Norway. Taxpayers not residing in the EU, Iceland or Norway cannot deduct expenses.
All the income (that is, the total amount of the rental income). This information must be provided by the client in Euro currency. If you have this information in another currency, please provide it to us duly converted into Euro amount.
Deductible expenses are those directly necessary for obtaining the real estate output (rent); for instance: invoices from the management agency taking care of the rental, cleaning and laundry during the days the property was rented, or the web rental service would be deductible.
In this context, the current circumstances do not accept deduction of the interests of the mortgage loans as they are considered necessary for the purchase of the real estate property but not for its rental. The same happens with the expenses for refurbishing, extensions and improvements of the building, as they are not considered fit for deduction in the real estate output (rent) declaration, but we recommend you keep the invoices in case you sell the property (it can be studied if they might be deductible in the capital profit and loss statement due to sale). It must be pointed out that the expenses for maintenance, repair and preservation of the property would definitely be deductible).
Also deductible would be the proportional part of the annual expenses of the property according to the rental period (e.g. electricity, water, gas, IBI, home insurance policy, etc.)
The client is under the obligation of providing us with the expenses and incomes. We shall fill in his/her statement with the legally applicable information provided. If there is any data missing it will also be missing in the tax summary. We would advise you to act reactively and collect as many expenses as possible.
In the tax summary you will see the expenses classified in two sections:
- Expenses directly applicable for the obtention of the rent (these would be expenses for the management agency taking care of the rental, the web rental service, cleaning and laundry services directly applicable for the period the property was rented).
- Expenses applied pro rata or in proportion according to the rental time (days). These would include water, electricity, gas, IBI, owners’ association, home insurance policy, heating oil, etc.
Tickets or hand-written summaries are not accepted. Invoices or simplified invoices must be submitted and they must contain expenses related to rentals and rental periods. In this context it will be the client’s responsibility to submit only those expenses needed for the rental, as we are unable to know or check this issue and therefore we do not accept any liability for the authenticity of the expenses you may be sending us to be added to your statement.
Yes, you must keep them for 4 to 5 years.
Yes, the Tax Agency shall review your statement and may ask you to provide documents showing the expenses and the incomes to check the authenticity of your declaration.
Must be urban properties and not dedicated to business activities.
- Must be rural properties with buildings which are not indispensable for the development of agricultural, forestry or livestock farms, not used for business activities.
- Must not generate capital gains as a result of the rental of real estate properties, business premises or mines, or from the constitution or transfer of rights or powers of use and enjoyment of real estate properties.
- Must not be the main residence of the taxpayer. In this sense, the main residence of the taxpayer would include the parking places purchased together with the building, up to a maximum of two units.
- Must not be a bare plot of land, buildings under construction, or buildings which cannot be used due to urban planning reasons. Should you consider that one of these is your case, please send us the relevant documents, including the sale-purchase deed or information from the property registry, information about the building state of your building (if applicable) and the IBI receipt (property tax). To get the IBI receipt, go to: https://www.porcel.legal/en/your-ibi-explained/