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Annual Real Estate Tax (IBI)
This tax is based on the “valor catastral” and can vary widely from town to town for the same type of property because it is a municipal tax. This real estate tax is called the IBI, the “Impuesto sobre Bienes Inmuebles”. The tax is increased every year in line with inflation. In addition to the assessed value of your property (“valor catastral”), the IBI also lists your referencia catastral number, which will identify your property at the “catastro” office together with its officially documented size. This can be important in buying and selling property because sometimes the physical description does not agree with the description given in the property title.
Catastral Value
The “catastro” office is the second form of property registration, and deals more with the exact location, physical description and boundaries. The “catastro” office is also the source of the “valor catastral”, which is the assessed value of the property used in calculation of local rates. If you are purchasing a new property this will not have been assigned a “valor catastral”, it therefore becomes the buyer’s responsibility to register the property at the “catastro” office for this tax. An existing property should already have its own “valor catastral”. The annual real estate tax IBI, charged by the municipality, will be calculated based on the “valor catastral”.
Fiscal Value
This is the value assessed by the tax authorities, and is the minimum value that should be declared on the title deed when a sale takes place.
Non-Resident Rental Tax
It is legal and acceptable for you, as either a resident or non-resident property owner in Spain, to rent out your property. However you must remember that you must declare your rental income to the tax authorities. You are actually required to declare the income within 30 days of receiving it, but can instead apply to make quarterly tax declarations in order to save paperwork.
Notary Fees & Land Registry
The notary fees are fixed by an official scale and the fee varies according to the size of the land, the size of the dwelling and its value.
Plusvalia
The other tax to be paid on a property purchase is the “arbitrio sobre el incremento del valor de los terrenos”, which is the municipal tax charged on the increase in the value of the land since its last sale, using the official value of the land as the taxable base which tends to be always lower than the market value. The land is officially revalued periodically for this purpose. This tax may be paid by either the vendor or the buyer, as agreed between the parties.
Property Owner Imputed Income Tax
In the case of a non-resident, since this property will not be considered to be the principle residence, the tax must be paid on a yearly basis. The tax payable is 2% of the rateable value of the property attributed to the property owner as a fictitious income on rental.
Transfer Tax
Called “Impuesto de Transmisiones Patrimoniales” in Spanish, is levied at 8% of the purchase price when it is lower than 400,000 euros, 9% when the purchase price is from 400,000 euros to 700,000 euros and 10% from 700,000 euros onwards.
A HOME BUYER’S GLOSSARY