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Paying taxes in Spain

Whether you're a resident in Spain or still paying taxes in your native country, you will be confronted with tax bills in Spain.
As owner, landlord or seller you are asked to pay taxes, whether you actually need to pay these is another story. There are however, a few ways to lighten the tax load. And regarding these, the wildest stories go around. In Spain tax evasion is a national sport. But sooner or later all the institutions involved will become electronically connected and the fun will be over.
So don't exclude the possibility that one day old dues will come to haunt you.

Income tax
(=Impuesto sobre la renta de las personas físicas, IRPF)
In Spain income tax is progressive, increasing from 18% till 48%. It's possible as a Spanish resident to deduct a certain amount of mortgage expenditure from your income tax.

Property tax
(=Impuesto extraordinario sobre el patrimonio)
Spanish residents have a taxfree base that does not apply to non-residents. Rates progress from 0,2% till 2,5%. Many people, including foreigners do not pay property tax.

Council Tax
(=Impuesto sobre bienes inmeubles)
The owner of real estate pays up to 0,6% council tax. The percentages differ per municipality.

Income tax non-residents
(people without a Spanish resident permit)
The Spanish treasury taxes foreign home owners with a sort of British value tax. This tax is not levied on Spaniards. 25% of revenue is due over 2% of the land registry value if the house is not let out. If you have put up the house for rent, you'll be paying 25% revenue on the rental income, this amount is to be collected by the party that is letting out the property.

Taxes over land value increase.
When selling your house including land, you always need to pay council tax over the increased value no matter how long it was in your possession. The amount is usually low as the percentage is also low and the fiscal value is taken into account and not the property value.

Capital gains tax
(=Impuesto sobre incremento de patrimonio de la venta de un bien inmueble)
A Spanish resident will probably pay next to nothing over the increase in value of his house if he invests in the purchase of a new one within two years.
If the latter residence is cheaper than the former he'll pay 18% over the profit, taking several tax deductible items into account. When a Spanish resident sells his second house and makes a profit he will be required to pay 18% tax over this profit whether he invests this money into a new holiday house or not.
A non resident turns over 35% of the profit he makes over the sale to the treasury department. The buyer will pay 5% of the sales price to the tax man.
This levy is a down payment that will be squared with the declaration you yourself are supposed to make, many default on this effectively limiting the levy to 5%.

Stamp Duty Land Tax
(=Impuesto de Transmisiones Patrimoniales)
7% of the official in the Escritura registered amount. When you buy from a project developer, you pay VAT.

If you buy land from a project developer you are required to pay 16% VAT. When buying from an individual it's only 7%. If you're buying a 'newly build residence' from a project developer you pay 7% over the total sum.

Building tax
(=Impuesto sobre construcciones, instalaciones y obras)
When applying for a building permit you are asked to pay 2.5% of the value of your future residence as indicated by the architect.

Never say in hind view: "I just didn't know!"

HipoteCasa will enable you to look before you leap and save you from expensive mishaps!

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