Buying a house in Spain is a really exciting process - but you'll need to think about how much owning a Spanish home will cost you in the long run too!
Before you commit to buying a property in Spain you should ask your independent Spanish lawyer to advise of you of the property's estimated running costs. This will help you to avoid any surprises when budgeting!
The running costs of your Spanish property will depend on the type of property you buy (villa, townhouse, apartment etc.) and whether or not you become a fiscal resident of Spain. Read on for an overview of the kinds of costs you can expect.
All properties are liable to council tax, which is known as IBI (Impuestos de Bienes Inmuebles). IBI is normally considerably cheaper in Spain than it is in the UK for a comparable property. Depending on where in Spain your property is located you can expect to pay this expense either once or twice per year.
IBI is based on the rateable value of your property and is paid to the local town hall. In some areas the cost of refuse collection (basura) will be included with IBI, in others it is a small separate charge. You will receive a bill for IBI followed by a payment document, and usually you will be provided with a timescale in which payment must be made.
You will of course need to pay for utilities in your new Spanish property. The most difficult aspect of paying your utility bills in Spain can be arranging for the accounts to be set up in your name. Unless you have good conversational Spanish we recommend asking for assistance from your adviser with this step. As in the UK you can expect to be charged for the usage of water and electricity, but you may also pay a separate standing charge. Utility companies in Spain will not take payment from an overseas account and so you will need to set up a Spanish bank account to make sure your bills are paid on time.
Community fees on developments
If you own a property in Spain that is part of a development then you will be obliged to pay community fees (Cuota Comunidad de Propietarios). These fees are paid by all property owners in a development, and go towards the maintenance of communal areas like swimming pools, gardens and even access roads.
Owners of properties with more extensive facilities - such as golf courses or spas - can expect to pay higher community fees. Details of such fees will be found in the documentation that was signed when you purchased the property, and the timing of such payments depends upon the community: monthly, annual or quarterly.
Non-resident's income tax
If you own a home in Spain but don't live there permanently, you will be liable to pay non-resident’s income tax. Even if you do not rent it out you will be required to submit an annual return.
You can expect to pay an annual tax that is calculated on the basis of the rateable value (valor catastral) of the property. The tax payable will usually be very low, based on a taxable amount of 1.1% of the rateable value. If you do rent out the property then you will be required to submit quarterly returns declaring the income received and the expenses you have incurred in each quarter. You can expect to pay quarterly tax upon the net income earned at a rate of 19%, taking into consideration deductible expenses.
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