Annual Running Costs

Costs in Spain are considerably Lower than in the UK and some other European Countries

Average ANNUAL Costs (costs vary according to size and number in occupation)

IBI:  Owned Property is subject to IBI tax Impuesto sobre Bienes Inmuebles. This local tax varies and is based on the Catastral value [Valor Catastral] of the property. this value is often considerably lower than the real value. On a property that has changed hands recently the Valor Catastral could be 75%, on a property which has not changed hands for 15 - 20 years or more, it could be much less. The tax varies depending on the area, but Generally on a property with a Valor Catastral of €120.202 (£85.312) you would expect to be taxed approx. €481.00 (£341.25) per year.

Basura:  In some areas you will have to pay the Basura [for rubbish disposal] separately, in other areas it is included in the IBI.

Patrimonia:  All non residents have to pay wealth tax Patrimonia based on the amount on the Escritura Publica or the Valor Catastral, which ever is the highest value. Roughly speaking This tax starts at 0.2% on the first 26 million, 0.30% for the amount from 26 million to 54 million and so on to a maximum of 2.5%. On a property of €156263 (£110.907) a non resident would pay a tax of €300 (£213). A resident pays nothing on the first €102.172 (£72.516). A husband and wife when resident and jointly owning a property have a combined allowance of €204244 (£145.032) [2 x17=34]. So they would pay nothing in Patrimonia tax on a house with a value of up to €204244 (£145.032), It really is only a wealth tax.

Non residents property owners tax:  Only Non residents have to pay property owners income tax. They are taxed at 25% of the income from your property whether or not you have a real income. The income is assessed as 1.1% - 2% of the Valor Catastral. The government have an ongoing policy throughout Spain of increasing Catastral values into line with real market values, the percentage applied to the new values is reduced to 1.1%.

Residents pay income tax:  Residents pay only income tax on their declared income starting at 20% there are the usual tax allowances

Urbanizacion and Community fees:  Properties on an Urbanizacion or in a Community will have to pay quarterly [or monthly] community fees, covering the running and maintenance costs of shared facilities which can include as private roads, drains, lighting, private water supplies, gardens, swimming pools etc. These costs vary considerably depending on the facilities available. The agent will advise you of the Community fees applying to a particular property. This sounds like a lot of paperwork, but unless you are looking for a "Hobby"! an Asesor fiscal will take care of everything and keep you 100% legal for a small monthly fee.

Other Considerations

NIE number:  You will need an NIE Number [fiscal identity number] It's handy to have one even if you are not a property owner, you can then open a Bank account. A number can easily be obtained from the relevant police station but can take a few weeks to process, so plan ahead.
( NOTE: It is Possible to open a local bank account WITHOUT an NIE - request a Non Resident account, you will be charged around 2000-3000 Pesetas once only if you do not Produce the NIE) 

Becoming a Resident:  If you wish to spend more than 6 months in Spain you will need to apply for a Residencia and become a Resident [your Residencia number will be the same as your NIE.

Taxes to pay Every Year on Property Ownership

1. Annual Real Estate Tax

This annual tax is handled by the Town Halls, which rules over the extension of the municipality. This tax varies from one municipality to another. Its Spanish name is I.B.I., and will be determined by location, size, nature of the land (urban or rustic nature) and the applicable percentages which

national laws leave to the discretion of the Town Halls.
The base on which the tax percentage is applied is called the valor catastral, which is the assessed value of the property by the local authorities. This amount seldom comes in round figures and it is the result of a number of calculations performed by the relevant authorities.
This value can be expected to be from 20% to 65% of the real market price. This should not be taken as a rule since the local authorities are in the process of raising these values to reflect the real selling prices. The tax can vary from a large coastal resort villa which can be required to pay up to €1803 (£1279) per annum, to a countryside villa that could be paying in the range of €90.00 (£64.00) per annum. A property of a normal size in a coastal resort should be required to pay between €241 (£171) and €601 (£246)

2. Property Income Tax

Non residents for tax purposes still need to make a tax return in respect of the notional letting value of the property. This tax return has to be made whether the property is let to anybody or not. Any property owner will possibly think that why pay income tax when there is no income. The reason for this tax to be in force is that the Tax Authority assigns an imaginary income, or imputed income, or notional letting value to the property, regardless of the owner actually deriving an income from the property. The tax base is the valor Catastral, the local assessed value of the property which can be found on a I.B.I. (Annual real estate tax) receipt. The percentage then to be applied is of 25% of a 2% of the valor Catastral, in other words, 0.5% of that value.

That 2% is the imaginary income the Tax Authority deems appropriate, and the tax applied is of 25% on the buyer's imaginary income.

3. Property Wealth Tax
This tax is levied on the capital assets, formed mainly by real estate when applied to non-residents. The base for calculating the Tax is the higher of either the assessed value (Town Hall value), the assessed value by the Tax Authority or the declared price shown on the Public Deed of Conveyance when the property was purchased. This real value is almost always the base for calculating the Property Wealth Tax.