Page 19 - A guide to buying a new property in the Balearic Islands
P. 19
A Guide to buying
Balearicislands
new property in the
Personal taxation and
scal representatives
8.
Both residents and non-residents owning property or investments in Spain are
under an obligation to le tax returns there. This is done yearly and on a
self-assessment basis.
An individual is considered to be non-resident if he or she does not remain
in Spain for more than 183 days in the calendar year and if the main base for
his or her economic interests lies outside Spain.
The following taxes are payable by non resident property owners:
1. Wealth Tax (Impuesto sobre el Patrimonio)
Spanish wealth tax, known as impuesto del patrimonio, has recently been
reintroduced, but with a much higher tax-free allowance of € 700,000
per person that also applies to non-resients.
2. Income Tax (Impuesto sobre la renta)
For non-residents this tax may involve paying income tax on investments
held, including interest on funds on deposit in bank accounts, and letting
income from properties at a basic rate of 24.75%. However, in the case of
tax residents, if this income is generally under about € 7,500 then there is
no obligation for a non-resident to le a return.
Regardless of the above, a non-resident owning real Estate in Spain such
as a Holiday home, is always under an obligation to le an income tax
return based on the “notional” income which he or she is considered to
have from it by the tax authorities. This “Notional Income tax” is payable
even if you do not rent your holiday home out to others. The amount of
income, which the tax authorities consider the property owner receives,
is 2% of the value of the property calculated as above. The taxpayer will
then have to pay tax at 24.75% of that 2%.
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