Finding Ways To Keep Up With Property

The Tax Implications for Property Ownership in Spain

In any case you happen to be owning property in Spain or are planning for buying one, then you need to know of the tax implications there are to follow this, both in Spain and in your home country if you so happen not to be a resident in Spain. By and large, one thing that you need to know of is that the tax liabilities that fall on you will vary as per where it is that one happens to be a tax resident and what use it is that the property will be put to. By and large, you can actually have the property for such a variety of uses and purposes some of which are like; for sale, rent out, for your future home or as a holiday home.

First and foremost, you need to know of the fact that when it comes to the purchase of property in Spain, at purchase there is always the initial tax purchase that will be levied. Generally, the applicable tax rates will be between 6.5% and 8% depending on the region where the purchase is being made. This said, you need to know of the bit that where the purchase happens to be a new property acquired from a developer, the ITP will not apply but you will only have to pay for the Spanish IVA which stands at a rate of 8%. However there are as well some of the areas, like in the Canary Islands where the IVA tax will not apply though you will have to pay a sales tax which is set at 5% for the new properties bought from a developer.

The other element of taxation that should be known when it comes to buying property in Spain is the tax on rental income. And this is so important for those who plan for making property purchase for investment purposes in Spain. Talking of this, it is to be marked as a fact that where the property is for such purposes, then the rental income will be taxable in Spain without any regard to your residency status. If you happen to be a non Spanish resident, you need to know of the fact that the applicable tax rate for rental income is set at 24% on the gross income. By and large, for the collection of these, the tenant is the one who will be charged with the need to withhold on this 24% tax on income and then they will have to have this paid to the tax man. For the Spanish residents, they will pay tax on their incomes and the rental incomes from outside of the country at the rates of 24% to 45% on a progressive scale.

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