Buying a home generates many costs for the buyer in addition to taxes, and it is not always obvious why you are paying them or to whom, yet they add appreciably to the costs.
Before making any payment ensure you receive invoices breaking down each element of the bill, the IVA, the identity and Tax Identi cation Number (NIF) of whoever has issued them. For those issued by notaries and registrars, if you disagree with any of the charges you may appeal against them as speci ed by the rules that laid down the tariff.
Municipal Tax on Increase in Value of Land in Urban Nature: Formerly known as “plusvalía”, this is a local capital gains tax based on the increase of the value of the land since the current seller bought the property and must be paid by the seller. The rate depends on the period of possession and the population of the town or city. Buyers need to be aware that if the seller is non-resident in Spain, if the tax is not paid then the buyer will have to pay it.
Property Ownership Tax (IBI): Formerly known as the contribución urbana, this is a local tax paid annually and based on the cadastral value (valor catastral) and according with the value of the land and the building, but usually much lower than the actual market value. Each Municipality decides the rate to be applied.
Wealth Tax (Patrimonio): Payable annually, based on the value of total net assets as of 31 December of each year, after the free allowance of €700,000. For non-residents, this will be based on the total value of their net assets in Spain. The rate varies from 0.24% to 3.03% at the time of going to press. As this tax is applied individually, if the property is owned by more than one person each of them will be taxed according to his or her share of the property.
Income Tax for non-residents (IRNR, Renta de No Residentes):
Income Tax for residents (IRPF, Renta de las Personas Físicas): Any person is considered to be resident in Spain if he or she lives in Spain for more than 183 days per calendar year. In that case, you have to le your Income Tax annually, and declare all your income regardless of where the income was generated.
Estate Equity Income Tax (Ganancias Patrimoniales Inmobiliarias): Calculated on the difference between the purchase price, plus taxes and expenses, and selling price, minus taxes and expenses, and applying an update coefficient approved each year in the Budget. All non-resident sellers will have to pay 20% of such a difference, and are also subject to a withholding tax of 3% of the sales price, paid to the tax office.
Rubbish Collection Tax (Tasa de Recogida de Basuras): This varies according to each property and is usually paid once or twice a year at a rate set by the local council.
Water Supply and Sewerage Tax (Tasa de Abastecimiento de Agua y Alcantarillado): Payable at a rate set by each council, usually four times a year, this is worked out according to water consumption in cubic metres.
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