At DFLAT Madrid we provide a brief summary of the taxes for foreigners not resident in our country who buy property.
Although if you need more information you can contact the Ministerio de Fomento.
Taxes for non-resident foreigners
The taxes paid by a foreigner on the acquisition or sale of a property are in some cases the same as those paid by residents, but in others they are specific.
For this reason, it may be useful to summarise them.
On the other hand, it should be noted that taxes do not have a single type, as some are collected by the Tax Agency (Agencia Tributaria) and others by the Autonomous Communities and local administrations.
There is also another aspect to consider when buying a house as a foreigner. There are taxes that do not overlap and are exclusive, such as the ITP and VAT.
If you buy a used property, you will pay ITP, but if it is new, you will have to pay VAT.
Finally, it should be noted that, although it is anecdotal, there are administrations that have unilaterally decided to eliminate certain taxes, such as the IIVTNU in certain municipalities.
The information provided here is therefore general and if you have any doubts about the type of tax that applies to you, it is best to contact the tax authorities of the corresponding territory.
Non-Resident Income Tax
The Non-Resident Income Tax (IRNR) is applied to the cadastral value of a property and is collected by the Tax Agency.
It is calculated on the basis of 1.1% of the cadastral value of the property and applied at a general rate of 24%, except for residents of the European Union, Iceland and Norway, where the rate is 19%.
Of course, if you are a foreigner and can prove that you have not lived in the property for the whole year, you will only have to pay the proportionate part of the tax, as long as you have documents proving that you have used the property only part of the time.
This is the main tax you will have to pay if you sell a property as a non-resident foreigner, because a Spaniard does not have to pay it.
Now, it applies not only to the sale, maintenance and rental of a home, but also to income from work.
Tax on the Increase in the Value of Urban Land
The tax on the increase in the value of urban land (IIVTNU), also known as capital gains tax, is a municipal tax.
It is payable by both residents and non-residents, both nationals and foreigners.
This is calculated on the basis of the increase in the value of the property over the previous 20 years, but only if there has been a real gain.
The rate is set by each municipality and there are special cases where the tax has been eliminated.
When selling a property, it is therefore advisable to find out in advance what you will pay.
Property transfer tax and documented legal acts (ITP)
The ITP is a regional tax payable when a property is transferred and the purchaser is liable.
It is paid by both residents and non-residents.
On the one hand, a certain amount is paid based on the cadastral value of the property, which depends on the type of tax set by each Autonomous Community.
You will also have to pay notary and registration fees.
Although the legal acts are not very burdensome, the so-called onerous transfers, which tax second-hand houses, are.
For this reason, it is advisable to check with the Tax Office of the Autonomous Community where the property is located.
Property tax
“Impuesto de Bienes Inmuebles” or Property tax (IBI) is applied to your property in a specific locality, both urban and rural.
The tax is imposed by the municipalities. It is a tax that residents and non-residents pay equally.
You should know that the amount you pay depends on what each municipality decides, so there are big differences.
If you own a property, you should know that you will have to pay this tax every year, whether you live there or not.
Value Added Tax
Most buying and selling transactions in Spain involve second-hand properties, but if you buy a new home you will have to pay Value Added Tax (VAT) instead of ITP.
This tax is 10% of the value of new homes that are not officially protected, in which case it would be 4%.
You will have to pay the tax to the Tax Agency, although you only have to do this when you buy the property.
This tax is usually paid on the acquisition of high value properties.
DFLAT, a property manager to consider
We market our properties through B2C, B2B channels, removal companies, relocation agencies, travel agencies and our own channels.
If you are an investor or owner of a property in Madrid, we can help you maximise the performance of your property.
