Tax, etc

As a non-resident,  CGT stands at 35% of the profit made on any property you sell, regardless of whether you are re-investing the proceeds in another property.  You must lodge a 5% deposit of the declared sales price with the Tax Office, with the balance to follow thereafter (if appropriate). 

Once you become resident (again, on issue of your card), you declare the sale details in your subsequent year´s Income Tax Declaration.  A number of costs can be offset, including re-investing any sale proceeds to buy a new Spanish property. If any CGT due it will currently be a tax of 20% instead of the non-residents 35%. 

Personal Tax

If you are non-resident, you should pay an annual Patrimonio & Renta (Wealth & Own Use Income ) Tax to the Government.  Once you become resident (i.e. when your card has been issued) you will need to make an Income Tax Declaration in the following year for your worldwide taxable assets.  If you are below the threshold for making a Tax Declaration, or receive a Pension for having worked in the Government sector (i.e. Teacher, Armed Forces, Civil Service etc), you will not need to make a Declaration.  

Patrimonio & Renta (Wealth Tax & Own Use Income Tax)

Every non-Resident property owner should make an annual payment to the Tax Office for having a property which is not their main place of residence.  If you live here all year round, but have not applied for Residencia, you should still pay this tax, which is payable any time from 1^st January to 31^st December and always a year in arrears.  Patrimonio is calculated at 0.2% of either the property value as declared in the Escritura or rateable value, whichever is higher, and is not proportional (i.e. even if you bought your property in October 2001, this year you would have to pay the whole annual amount due).  

Renta is nothing to do with renting out the property – it is a separate “own use” tax which is paid with the Partrimonio, estimated on 1.1% of the rateable value of your property x 25%.  This tax is proportional, so if you bought in October 2001 you would only pay an amount this year for the October to December of last year. 

Owning More Than One Spanish Property

If you own one Spanish property you may make a declaration at the Hacienda (Tax Office), but if you own two or more properties you are obliged to use a qualified tax adviser to make the declaration on your behalf. 

If you rent your property, in addition to the Patrimonio/Renta Tax you should make a further tax declaration which will be calculated at 25% of the gross rental income – I suggest you seek the assistance of a qualified tax adviser if this is applicable to you. 

N.B. If you are a Resident, you will not pay this tax, but may be obliged to lodge an Income Tax Declaration depending on various factors, such as amount of taxable income received.  I shall be discussing Tax liabilities for Residents in a later article. 

Finally, please bear in mind that there are a number of other taxes payable throughout the year, such as road tax for Spanish registered vehicles, work taxes for self-employed individuals, and so on.  Details of the various taxes and their voluntary payment periods are always available at Suma and/or local Ayuntamientos.

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