Overheads or costs for ownership of a Spanish property
Please note that the information provided in this article is of a general interest nature and intended as a basic outline only.
For all properties there are the following commitments to pay when you are a title owner of a property in Spain.
• Impuesto Sobre Bienes Inmuebles or “IBI” is a local Town Hall charge and effectively an annual real estate tax. IBI’s are similar to “Rates” in the UK. This is payable irrespective of whether the owner is a resident or not. Calculated on the basis of the valor catastral (an administrative value that is usually lower than the market value, sometimes considerably so) set by the town hall the tax rate goes from 0.4% – 1.1% of the valor catastral depending on the Spanish region.
• Annual Wealth Tax (Impuesto Sobre Patrimonio) This tax has been changed several times in recent years. Please consult your accountant or legal for up to date rates if applicable.
• Utility bills - Water and Electric are billed only by consumption of usage: Electricity is billed every two months, usually after meters have been read. However, companies are permitted to make an estimate of your consumption every second period without reading the meter. Water Bills are generally sent out quarterly. There’s also a rental charge for the water meter which is approx. 4 Euros per quarter. Water is supposedly safe to drink in all urban areas, although many residents prefer to drink bottled water. water may be extracted from mountain springs and taste excellent.
• Community charges. These charges will be rendered if you buy a property on an Urbanisation. The “community” will maintain the gardens and swimming pools. The costs of their work and staff will be covered by these charges. In large formal Urbanisations these charges may be quite high but they may also include the provision of water to your property.
• Basura - Rubbish Collection tax. This is paid every two months by all property owners to the local Town Hall.
• Insurance - It is compulsory to have fire insurance when you have a mortgage.
• Personal Income Tax (Impuesto sobre la Renta de No Residentes – IRNR) Non-residents who own property in Spain have to pay an annual income tax that varies according to whether the property is rented out or not.
• Rental Income: If non-residents rent out their property and receive an income in exchange, they are obliged by law to declare this income and pay taxes on it. The taxable base and the tax rate will be determined by the laws as they apply to each person’s particular circumstances (taking into account the double taxation treaty – if any – between Spain and the country of origin of the non-resident). In many cases non-residents simply pay a flat rate of 25% of the gross income they earn from their property in Spain.
(Residents in Spain will have to pay the income tax based on their income earned during the year. The tax rate depends on the level of income).
The most noticeable change in Spain so far is the decrease in the cost of fuel – leaving the population feeling as though they have a little more cash leftover to spend. Elsewhere, grocery costs have remained similar, while electricity prices have risen for almost everyone. When dining out, you can still get a menu of the day (Menu del dia) at lunchtime for around €10, which will include three courses, wine, water and bread – and more and more restaurants are offering evening menus too, at a slightly higher cost, of course! Wine, beer and coffee prices have remained stable.