Running costs when owning real estate in Spain

After the sale has been fully finalised and you can start enjoying your new home, of course there are annually recurring costs that are associated with the ownership of real estate in Spain. These include, for example, the following costs:

  • Real Estate tax (in Spanish Impuesto sobre los Bienes Inmuebles, or in short: IBI). This involves a local tax on possessions in Spain. It is calculated as a percentage of the cadastral value of the property, which is valued annually by the municipality. Therefore, the IBI differs per municipality.
  • Utilities. Electricity, gas and water are recurring costs. Arcos & Lamers Asociados can organise the contracts with the required suppliers for you and if desired arrange automatic payments so you don´t have to worry about these.
  • If you are a non-resident taxpayer who owns a property in Spain and you don´t let the property, you are still taxable in Spain for the income tax. In Spain, this tax amounts about 2% over the registered value of your property.
  • You pay a monthly service fee to the owners association (comunidad de proprietarios) when your property is located within a complex, urbanisation or building through which you are co-owner of communal things like staircases, elevators, security, swimming pools and gardens.
  • Garbage collection tax. The rates vary between municipalities, but generally this concerns a couple of hundreds of euros annually.

Law for rental agreements in Spain

If you have decided to let your property in order to increase the return of investment of your purchase, you have to consider various laws and regulations. By letting a property, taxes have to be paid. A distinction is made between short-term and long-term rentals. Non-residents that own a property are taxable for the income they generate from the property, whether they let the property or not.

In the latter case, the tax has to be paid at a rate of 24.75% over de rental value. In the former case, the tax amounts 24.75% over de nett rent. You have to declare this tax yourself. Arcos & Lamers Asociados can help you with this declaration.

Seeking legal advice from lawyers with a solid knowledge of the Spanish situation (differing from region to region) is sensible if for whatever reason you are considering to let your property. We advise you, for example, to draw up a tailored formal rental agreement.

The information set out in this document is provided merely for information purposes and is not legally binding. You are invited to also visit our website in the event you wish to obtain additional information about sale or purchase of real estate in Spain.

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