Income Tax “Impuesto sobre la renta de las persnas fisicas” (IRPF) levied by the national government is payable via the Inland Revenue (Ministerio de Economia y Hacienda) through tax offices (Agencia Tributarias) by non-residents on all income in Spain and on all income world-wide by residents including pensioners and those who have been assessed as partially but absolutely incapacitated whose total world-wide income is above the limits set out in the annual state budget or the unemployed whose income is above a certain limit.
If only one property is owned by a non-resident and there are no other assets in Spain, one tax form (210) is used for IPRF (income tax), “patrimonia” and income from rented property.
If property is let, income tax has to be paid on the rents received. Spaniards and foreign residents liable for income tax declare this on their tax form and pay it according to their total income. Non-residents must pay income tax on rents or any other income arising in Span as well as the “patrimonio”
Income tax is payable from May-June every year and can be paid through any bank or “caja de ahorros” (savings bank) on completion and presentation of the correct form bought from tobacconists “estancos”. Alternatively individuals can go to the Inland Revenue or a tax office in their locality where these forms cam also be obtained.
As from the year 2000 the Inland Revenue will send a form (calculating tax payable) to every tax payer. If this is incorrect, it must be challenged within a certain period.
Income tax includes rents from property and is only paid by non-residents who live for more than 182 days in Spain unless the rents plus any other income from Spain is more than a certain sum. It is also paid on property (other than the habitual home) every year (not the land) on the highest of the following:
Value on rates (IBI) receipt.
Value on title deeds (escritura) at time of purchase.
Complementaria” or assessment made by the Inland Revenue if it is decided the value declared on the deeds is too low.
The tax paid is at a higher value if the property is only used as a private residence. If there are no other assets in Spain, only one tax form (210) is used for both taxes, payable annually. If the property is used as a business (i.e. rented) the tax is 25% of the income received and has to be collected four times a year before the 20th of the months of January, April, July and October. The owner is responsible for making the tax declarations.
Flats and houses used as habitual residences are now exempt from income tax.
When residents sell property, a portion of the sale price has to be declared in the annual income tax return. Non-resident vendors have to pay a capital gains tax (using form 211) at a higher level but the purchaser can retain a percentage of the price to be paid direct to the Inland Revenue. Form 210 is used to pay the difference between the percentage and a final assessment. Form 211 is also used for income from services or assets in Spain.
Residents have to pay this tax too
The amount of tax depends on how long the property has been owned. The date is calculated from the day the property was registered:
If it was bought before 31.12.1986 there is no tax to pay
between 31.12.1986 and 31.12.1994, a 14.28% deduction is made in tax for every year the property has been owned. i.e. the longer it has been owned, the less is paid. There is a fixed amount of 18% tax on the remainder.
from 31.12.1994 onwards there is no reduction and 18% tax has to be paid. However inflation is taken into account using coefficients published yearly by the government.
If the house has been owned for less than one year, tax has to be paid between 18% and 48% according to income.
Any owner aged 65 years or more does not have to pay tax on the sale of the habitual home, but if they pay income tax they have to pay on any other property sold, as above.
When a habitual home is bought, 15% of the sum spent (up to a limit of 1,500,000 ptas ) is paid back to the purchaser by the tax office. (the maximum deduction is 225,000ptas.
If there is a mortgage a 25% deduction from tax is made on the first 750,000ptas and 15% on the rest (up to 1,500,000ptas).After the third year the deduction is 225,000ptas
If an agreement is made with the vendor to pay in instalments (at least two), there is the right to deduction.
The Spanish Inland revenue’s definition of “habitual residence” means that the vendor must occupy the house for up to 12 months annually and live in it for three years.
Whilst great care has been taken to maintain a high standard of accurate and reliable information Viva-Malaga cannot accept liability for any errors or omission. Information supplied by FreshStart Advice Centre.