Real Estate Taxation in Spain: What You Need to Know

Spain is a popular destination for real estate investors, both for its attractive climate and financial opportunities. However, before jumping into buying a property or investing in real estate, it is crucial to understand the applicable tax framework, especially for non-residents.

1. Non-Resident Income Tax (IRNR)

If you are a non-resident and rent a property in Spain, you are subject to Non-Resident Income Tax (IRNR). This tax applies to income generated from renting real estate. The current rate is 19% for residents of the European Union and 24% for those outside the EU. However, EU residents can deduct certain expenses related to property management (maintenance, repairs, etc.), which is not possible for non-EU residents.

2. Wealth Tax

In Spain, both residents and non-residents must declare all their assets if they exceed a certain threshold. This tax applies to people who have a net worth of more than €700,000, with variations depending on the autonomous communities. Real estate is part of the assets subject to this tax.

3. Property Tax (IBI)

IBI is an annual local tax paid by owners of real estate in Spain. It is calculated based on the cadastral value of the property, which is often lower than the market value. This tax varies by municipality, but is unavoidable for any homeowner.

4. Municipal Capital Gains Tax  

When selling a property, owners must pay the municipal capital gains tax, which is a tax on the increase in the value of the land between the time of purchase and the time of sale. This tax is generally calculated based on the cadastral value of the land and the period of possession of the property.

5. Capital Gains Tax (IRPF)  

Non-residents must also pay taxes on gains made from the sale of real estate. The rate is 19% for EU, EEA, or Swiss residents, and 24% for other non-residents. However, some exemptions may apply if the gains are reinvested in a new primary residence in Spain.

6. Tips to Optimize Your Taxation  

Real estate taxation in Spain may seem complex, but it also offers opportunities. It is recommended to work with a specialized attorney or tax advisor to optimize your returns and minimize tax costs. For example, for EU residents, the deduction of rent-related expenses can significantly reduce the tax burden.

In conclusion, a good understanding of real estate taxation in Spain is essential to manage your investments in the best possible way. Whether you are a resident or a non-resident, I-VEO Synergy's advisors help you to have good tax planning that will allow you to optimize your income and get the most out of your real estate investment.

🎙️ Want to know more?  

Join our Conference on Real Estate Taxation for Non-Residents and get answers to all your questions!

📅 Friday, September 27, 2024 at 6 p.m.  

📍 Auditori del Centre de Serveis Puigmal, Empuriabrava

A lawyer who is an expert in tax and real estate law will reveal the keys to better manage your investments in Spain. Whether you are an owner, investor or just curious, this conference is for you!