Wealth tax
If you own a property in Spain you must pay wealth tax or patrimony on all your Spanish assets. As a tax resident in Spain you are taxed on your world-wide wealth, if a non-tax resident, you will be taxed on your wealth in Spain.
Income Tax
All income for UK residents in Spain is taxable Tax rates vary depending on
Community fees and the community of owners
When buying a property in Spain with shared facilities, such as a communal entrance, swimming pool or other leisure facilities, it is a legal requirement that the purchaser becomes a member of the community of owners or the Comunidad de Propietarios. This would be termed a Residents’ Association in the UK, but it has the full weight of the law behind it.
Each Comunidad de Propietarios has its own rules, which will be set out in a separate document to the purchase contract, known as the Estatutos, or by-laws. In the case of a new development, it may not be finalised until building work is completed.
Owners of apartments or villas in a community are jointly responsible with the other owners for the expenses of the community. Each owner’s percentage of costs is fixed by the apartment or plot size, with the share being stated in the Estatutos. Expenses can vary substantially, according to the services required by the community, which might include a hall porter’s salary, garden and pool maintenance, servicing of lifts, repairs, electricity for lighting in common areas, insurance, refuse collection and management and administration fees. Accordingly, your lawyer should make enquiries on your behalf as to the method of setting the community fees, the amount payable and what provisions have been made for review of the charge.
By law the Comunidad de Propietarios elect their own Chairman or “President” from members of the community, and appoint an Administrator, who may be a paid official but is more often one of the residents of the development. Where a development consists mainly of holiday homes, it is generally a professional property manager who, at the annual general meeting, would present the budget for the forthcoming year. The Chairman and the Administrator agree together about the work to be done, instructing contractors and signing any documents that may be necessary.
Local rates - Impuesto Sobre Bienes Inmuebles or “IBI”
These must be paid in one payment due between 15th September and 15th November each year and is a municipal real estate tax. As property owner you must ensure that you pay this. It is also the owner’s responsibility to find out how much is owed which will vary but is usually 0.5% of the value of your property.
You can arrange for your bank to pay your IBI as well as your electricity and water bills. Payment by your bank involves filling in a form that authorises the tax demands to be sent to your bank rather than you. You must report your property purchase to the Delegación de Hacienda, or tax office for assessment of this tax.
We do hope that this piece helps you to come to grips with the detailed but not overly complicated process of buying in Spain. We look forward to seeing you here.
© The Rights Group SL 2006 (Marbella)
Mark FR Wilkins
www.therightsgroup.com (under review)
+34 600 343 917
Please note that the information provided in this article is of a general interest nature and intended as a basic outline only. You are well advised to contact a professional for advice specific to your circumstances. Nothing contained in this article should be seen or taken as the writer or publisher providing legal or financial advice.