Costs to Maintain a House
Congratulations - you’re the new proud owner of a beautiful home in sunny Spain! Now that you’re living the dream, what are the costs to maintain your property in Spain?
At the top of the list of property maintenance costs in Spain comes the Spanish “IBI” ("Impuesto Sobre Bienes Inmuebles”) which literally translates to Property Tax. However, it would be more accurately described as the equivalent to the UK’s council tax, as IBI is payable to your local town hall, that your property is registered, to service and maintain your community services and infrastructure.
Spain’s IBI Property Tax: How Much Do I Pay?
Spanish property tax (IBI) is due annually (around August to November) and calculated upon the regional cadastral value which considers the build size of the property, the land classification the property is built upon, plot size, and the proximity to services and infrastructure. These factors are all variables in the equation used to assign a “valor cadastral” (taxable value) to each property in the area. As a general guideline, the taxable value calculated by the local town hall (“Ayuntamiento” in Spanish) generally is about 0.4 – 0.5 % per annum of the cadastral value. For example, in general, IBI for an apartment of 100.000 Euros, will be around 400 Euros per year.
There are significant differences in cadastral value calculations between municipalities in Spain depending upon the level of public services provided by the local council and if your catchment is a small town or a large provincial capital. Land location and housing type have a direct influence on the annual IBI tax payment due. A Finca in rural Spain would incur an IBI tax in the low-hundreds, whereas a coastal property in exclusive areas such as villa in Marbella may cost higher.
Referred commonly to the IBI tax across Spain, some areas, such as the Alicante province, refer to the IBI tax as “SUMA”. SUMA denotes “Suma Gestión Tributaria” - the public provincial agency established by the provincial Council of Alicante that specializes in tax administration: assessment, billing, collection, and enforcement.
How Do I Pay IBI Property Tax?
Most town halls mail IBI property tax notices that explain how, where and when payments are due. Some town halls oﬀer discounts for prompt payment, and all town halls add penalties for late payment.
It’s important to note that the legal responsibility for payment of Spanish property tax is upon the homeowner. Town Halls are not obligated to send out reminders and failure to receive written notification does not exonerate the need for timely payment.
Good to Know: IBI Property Tax
- Spain’s IBI tax is a property tax collected by your local council.
- IBI property tax is payable once a year.
- Keep your IBI property tax invoices, for if you sell your home the buyer’s lawyer will ask for copies for the past four years.
Non-Resident Property Tax in Spain
IRNR Non-resident income tax (known as “Impuesto Sobre la Renta de No Residentes” in Spanish) is an annual tax for non-residents (who live in Spain for less than 183 days per year) and own property. As a non-resident property owner, that does not rent out your property and if you don’t have any other income-based in Spain, you shall pay income tax based on the value of your property.
The tax is calculated based upon a percentage of the cadastral value which can be found on your IBI receipt issued by your town hall each year. This tax must be submitted between the 1st of January and the 31st of December with regard to the previous tax year.
IRNR will usually be very low. It’s based on a taxable amount of 1.1% of the cadastral value and taxed at the rate of 19% for EU citizens and 24% for non-EU citizens. For example, for a property of 100.000 Euros, you will need to pay 190 Euros per year or 240 Euros as a non-EU citizen for IRNR.
Any income earned in Spain as a non-resident is also liable for income tax such as interest earned on bank deposits in Spain, property in Spain, rental income in Spain, or any income derived from commercial activity in Spain. The tax already paid in Spain can be deducted regarding double-taxation agreements between the countries.
In case you rent out your property, you have to pay income tax on the rent instead of the tax described above IRNR. You will have to declare your income, your deductible expenses, and pay income tax quarterly.
The income tax rates for 2019 are as follows:
Income from (0 to 12.450€ 19%) (12.450 to 20.200€ 24%) (20.200 to 35.200€ 30%) (35.200-60.000€ 37%) and to max 45%
IRPF Personal Income Tax (known as “Impuesto Sobre la Renta de Personas Físicas” in Spanish) is a direct tax levied on annual income for residents of Spain, (regardless of property ownership) and is payable annually on your worldwide income. Personal income may derive from employment or self-employment, and the taxable income is determined as the diﬀerence between the worldwide income earned and the expenses that are deductible according to Spanish Law.
As a resident, you can include your rental income with general income while making your annual Spanish income tax declaration.
Spain’s Tax-Deductible Expenses
Certain deductible expenses such as caring for dependant relatives, children, and amounts paid for the purchase of a home or accounts opened for such purpose (“cuentas vivienda“) may be claimed in the annual tax returns.
Employers are also obligated to provide employees with a certificate of taxes withheld (Certificado de Retenciones) so employees are able to subtract paid amounts to calculate their tax obligation.
Household Waste Tax
Household waste tax, otherwise known as “Tasa de recogida domiciliaria de basura” in Spanish is payable depending on the type and location of your home.
It can be 80 Euros for an apartment or up to 200 Euros for a villa.
Property Costs: Management and Community Fees
Community fees (known as “comunidad” in Spanish) are costs paid for the maintenance of shared facilities and communal spaces used by all residents in a private development, commonly known as an “urbanización” in Spanish. These fees cover costs incurred by Management of the Development to maintain and service green spaces and landscaping, swimming pools, tennis courts, play areas, internal roads and lighting, stairwells and elevators to apartment blocks, perimeter fencing, security, and routine cleaning. Annual maintenance budgets are decided on a managerial level and in agreement with the owner’s association, which all residents are invited to join. The agreed annual budget is then divided by all residents according to property type and size.
How Much Do I Pay for Community Fees?
Community management fees in Spain can vary between one hundred, to a few hundred Euros per year.
Rental Contracts in Spain: Do I add VAT?
Valued added tax (VAT) is not required if you rent your property in Spain for residential use. However, if your property is rented to tenants who intend to use the premises for commercial activity, as the Landlord, you are obligated to deduct 21% VAT and lodge quarterly VAT declarations to the Spanish Tax Oﬃce. Note: VAT in Spain is referred to as “IVA” in Spanish.
Having an accountant or ‘gestor’ who will take care of all kinds of paperwork and make your life easier. This will cost you around 300 Euros per year.