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Deadline: December 31, 2014: Property comes with the obligation to pay taxes

by Andrea Lechtape

Actually, persons who acquire property in Spain should already have been informed at the time of purchase about all the obligations resulting from it. In this article, we are referring only to real estate acquired in Spain by foreign citizens, and which are not rented out.

Foreign owners who acquire a holiday property often assume that all obligations are met as long as they pay taxes and waste disposal fees to the municipality (Impuesto de bienes inmuebles IBI y basura).

What many property owners don't know: All non-residents, i.e. all property owners who are not tax residents in Spain, are obligated to pay the so-called "own-use tax" whenever the property is not rented out or leased out.

This is an implied tax which assumes that even the mere ownership of real estate in Spain corresponds to income..

The tax return must be filed no later than every December 31st for the previous year. (This year, on December 31, 2014 for the year 2013). The amount of tax depends on the land register value of the property.

The land register value is shown in the annual tax assessment (impuesto de bienes inmuebles) issued by the municipality. The tax base is 1.1% of the land register value provided that this value has been updated after 1994.

The tax rate is currently 24,75% and will be applied to the tax base.
All owners are obligated to file a tax return and pay the taxes for their share of the property.

In the year in which the real estate is acquired, the tax is charged for the number of days on which the purchaser was in possession of the property.

Special attention should be paid to the fact that the Revenue Office does not send a notice to property owners requesting this tax. It is the owner's responsibility to file the tax returns and to pay the taxes.

Until last year, the Spanish Revenue Office hardly ever used its control mechanisms to ensure that the "own-use tax" is actually being paid by foreigners.

In the meantime, they seem to be checking with the municipalities because that is where foreign property owners are registered with their Spanish tax number (NIE), since they collect property taxes (IBI) every year.

It has become apparent that since the summer of 2013, the department for non-residents at the Revenue Office in Las Palmas has requested thousands of foreign property owners in the municipalities of Haria and Teguise and Tias to disclose their tax status retroactively for the years of 2010-2012. The the effect was that considerable amounts in back taxes had to be paid for those calendar years.

To ensure that this subject does not confuse you, why don't you simply make an appointment for a personal consultation? We would be pleased to inform you about the "own-use tax" and the tax obligations that result if your property is rented out. We would be glad to provide you with information at our office on Mondays to Fridays between 8 a.m. and 2:30 p.m.

Please make an appointment by calling our telephone number:
928 826691.

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