Useful Information on Real Estate Taxes in Spain for Golden Visa Holders

The Spanish Golden Visa program is one of the most popular among investors from Russia. It provides applicants with several different investment options. These include their business projects, capital investments, and financial assistance to Spanish businesses. But, as evidenced by statistics, the total advantage retains one option - obtaining a residence permit by buying real estate in Spain. It is chosen by more than 92% of all visa applicants.

And here - the property is bought, all documents are executed, and the investor and his family members receive the coveted residence permit card. Natural questions arise: "And what taxes will now have to pay the new owner of housing? What should be paid and in what amounts"? We will give answers to them.

At the outset, we emphasize that the amount and composition of your taxes will depend mainly on two major factors:

• Whether you will be a tax resident in Spain, or whether you will remain in a non-resident status.
• How you dispose of the purchased property: use it for your use, or rent it out.

How to understand whether you are a tax resident or not?

To obtain tax residency you need to either live in Spain for more than 183 days a year or have economic interests (economic activity) in the country. But since we are talking about investors who received a "golden" residence permit by buying real estate - they are prohibited from doing business in Spain.
Regarding the duration of residence - The Golden Visa does not require the investor to stay in Spain for an extended period per year. This requirement arises only over time if you intend to obtain permanent residence or citizenship of the Kingdom. Thus, the overwhelming number of Russian citizens who have been issued a Golden visa of Spain, in the first 5 years usually remain in the status of a non-resident.

What taxes a non-resident is obliged to pay

For this category of investors, there are three mandatory types of taxes.

1. Real estate tax. The official name is Impuesto sobre Bienes Inmuebles (or simply IBI). Since this tax is a municipal tax, its amount can vary significantly depending on the municipality to which the property belongs. Its calculation necessarily takes into account the cadastral value of the object at the time of purchase, as well as the amount of annual inflation. In the country as a whole, the IBI rate varies from 0.405 to 1.3% of the cadastral value. This amount can be paid in installments but must be paid in full within a year.
2. Additional property tax. It also differs in size depending on the municipality. It is a fee for the care of the adjacent territory, and it can be considered a "garbage tax" with some conventionality.
3. Income tax for non-residents. If you make a profit from renting out housing (and this is a common case for Russians, owners of Golden visas), you pay 24% of the amount of profit received. The tax is withheld even if the housing is not rented out, but then it is 24% of 2% of the property price (or 1.1% if its cadastral value changed after 1994).
4. IP condition tax. Ranges from 0.2% to 2.5%, and is in direct relation to the value of the property.

Taxes for residents

Resident foreigners pay the taxes listed above, except for the last one. In other words, if they use the purchased housing, they do not need to pay income tax on it.

But in the case of renting, the resident pays capital gains tax from the profit received, which is calculated on a progressive scale.

Important! We emphasize that residents pay income tax in Spain on all their worldwide income, while non-residents - only on the income they receive in Spain.
Undoubtedly, in addition to the main tax items, property owners in Spain make some other regular payments. First of all, these are various kinds of communal charges. Most of the housing in Spain belongs to different communities of property owners, so each owner pays their share of the maintenance costs. This includes, for example, staff salaries, contractor costs, electricity and water costs.

In the case of a private home, insurance will have to be taken out on it, and payments for this will also be on the list of mandatory payments.

More complete and accurate information about all the nuances of the fiscal policy of the Spanish authorities you can get from the consultants of our company GARANT.in.