An article published on: 24th October 2020

Anyone who owns real estate in Spain automatically has to deal with the Spanish tax authorities.

However, whether or not the owner is a resident in Spain for tax purposes, and whether the property is rented out or vacant, for example, can make a big difference. 

1. When the owner is a tax resident in Spain, he or she pays “normal” income tax (“Impuesto sobre la Renta de las Personas Físicas”, abbreviated as “IRPF”).
2. If the owner is a non-resident of Spain for tax purposes, he or she pays non-resident income tax (“Impuesto sobre la Renta de No Residentes”, abbreviated as “IRNR”).
3. From the actual income earned, including rental income, the net income is subject to tax.
4. If the real estate is vacant or occupied exclusively by the owner, the cadastre value of the home or building is decisive for taxation. In such cases, something called income imputation, or “imputación de rentas”, in Spanish, takes place.

There are 3 situations in which no taxes must be paid on real estate ownership:

1. When the owners themselves live on the property (= main residence) or
2. When it is an undeveloped plot of land or
3. When the property is under construction or has been declared unsafe.

Let’s take a look at 3 situations:

1. The couple only uses the holiday home themselves when on holiday.
2. The couple only rents the holiday home out for the entire year.
3. The couple does both: they use the holiday home themselves and rent it out for part of the year, and there are also periods when the home is vacant.

I use the terms “holiday home” and “holiday flat” indistinctly because for the purposes of taxation in Spain it is irrelevant whether the property is a flat or a house.

If the couple only occupies the holiday home themselves, they need only file an income tax statement (Form 210) once a year. The tax base in this case is the imputed income, known as “Imputación de rentas” in Spanish.

That means the Spanish Treasury simply imputes the income depending on the real estate value, regardless of whether or not the owner actually earned any income, and regardless of whether the home was vacant the whole time or occupied by the owner at least part of the time.

Let’s assume that the couple owned the holiday home for the entire year and that the cadastre value is EUR 200,000. The land registry has updated the value of the district in which the house is located in the past 10 years.

Thus the tax base would be as follows: EUR 200,000 (cadastre value) *1.1% (statutory rate) *365/365 days (portion of the days used in the year) = EUR 2,200.

The tax rate for non-resident income tax on real estate ownership is 19 or 24%. 19% is applicable when it can be proven that the person’s tax residence is in an EU Member State. On the other hand, if the owners live in a country that is not an EU Member State (such as Switzerland) the rate would be 24%.

Thus, in this case the owners would have to pay 19% * EUR 2,200 = EUR 418.

If the couple rents out the holiday home during the entire year, they must pay tax on the income generated from rental payments. In this case, the tax rate is also 19 or 24%, depending on whether or not the owners are tax residents of another EU Member State.

Tax on rental income is paid on a quarterly basis in April, July, October and January. In this case too, Form 210 must be filled out and submitted.

Let’s assume that the holiday home is rented for EUR 500 per month. The owners have deductible expenses (i.e. real estate tax, depreciation, repair costs, etc.) amounting to EUR 300 per month. 

So the net income amounts to EUR 500-300 = 200 per month and therefore, 200*12 = EUR 2,400 per year.

This net income is then used as the tax base.

Thus, here the owners would have to pay 19% * EUR 2,400 = EUR 456, or EUR 114 each quarter.

In this case, if the couple occupies the holiday home themselves, as well as renting it, the two systems must be combined.

• During the period in which the house is vacant or occupied by the owners, tax is paid on the imputed income (based on the real estate value) and
• during the period in which it is rented out, the net rental income will be taken as the tax base.

Let’s assume that the couple rents out the home from January to May, then occupies it from June to October, and in November and December it remains vacant.

a) From January to May the home is rented out: 5 months.

The tax payable amounts to: 19% * EUR 200 (see above) * 5 months = EUR 190. The relevant tax statements must be filed in April and July of the same year, for Q1 and Q2.

b) From June to December the home is occupied by the owners or vacant: 7 months.

The tax payable amounts to: 19% * (EUR 200,000 * 1.1%* 7/12 months) = EUR 243.83. The tax statement for this amount must be submitted and the tax paid by the end of the following year.

In this case, the owners would have to pay a total of EUR 190 + 243.83= 433.83.

Unfortunately, there is no good across-the-board answer to that.

In the event of vacancy or personal use it depends on the cadastre value of the property and when this value was most recently examined by the administration. If there is no cadastre value, the purchase price is taken into account.

When it comes to renting, it depends on how much rental income can be earned, of course, and on the related expenses and how much can be deducted. If the property is only rented during part of the year, the expenses can only be partially claimed. As an example: the entire real estate tax amount for the year cannot be deducted if the home was only rented for 5 months. In that case just 5/12 of the real estate tax amount could be deducted. 

It is important that they know whether or not they are tax residents in Spain.

Anyone who is a resident must submit the “normal” income tax statement (IRPF) and indicate the income (actual or imputed) earned from the real estate.

Anyone who is a non-resident must submit a non-resident income tax statement (IRNR)

• at the end of each quarter, if rental income was earned, or
• by the end of the next year, if the property was only occupied by the owners (or remained vacant).

As always, it is possible to fill out and submit the tax forms oneself or to hire a tax consultant to do so.

Are you familiar with tax matters and want to prepare and submit your tax forms yourself? 

You can do that here.

Important: To do so, you must have an electronic signature or some other means of identification, such as a “Cl@ve PIN”.

Do you want to make sure you don’t miss any deadlines and that everything is correct? Would you like to have an expert contact person who can answer your questions? 

Then contact me and let me help you by taking care of your tax statements for you! 

Do you still have questions regarding this matter? Then write to me and make a consultation appointment! It is that easy.