Tax
Buying is a moment; owning is forever, or at least for many years. And holding a home in Spain without living here brings its own tax duties that are worth knowing before you buy, not when the first letter from the tax office arrives.
Non-resident income tax, even if you don't let. Non-Resident Income Tax applies to anyone owning property in Spain without residing here. If you don't let it, a notional income is imputed: a percentage of the cadastral value (usually 1.1% or 2%, depending on when the cadastre was revised), taxed at 19% if you reside in the EU or EEA, and 24% otherwise. If you do let it, you declare the rental income; EU/EEA residents are taxed at 19% and may deduct expenses, while those residing elsewhere are generally taxed at 24% on the gross income, with no deductions.
IBI, every year. It is set by the town hall of the municipality on the cadastral value. On the Costa del Sol the rate varies from town to town; our website has an orientation calculator by municipality.
When you sell, two things. The buyer withholds 3% of the price against your gain, and the town hall charges the municipal plusvalía on the land value. If the sale produces no gain, that 3% is refunded, but it must be claimed properly and on time.
Legal analysis. The reference rule is the consolidated Non-Resident Income Tax Act (Royal Legislative Decree 5/2004). The fine point lies in the EU/non-EU distinction: the ability of an EU/EEA resident to deduct rental expenses came from European case law, which corrected the worse treatment of the EU non-resident. The 3% withholding is in article 25.2 of that Act and is a collection guarantee for the tax office, not an extra tax: if there is no gain, it is recovered. The practical key is to coordinate tax with accounting and miss no deadline, because late-filing surcharges are silly and avoidable.
Already an owner and not sure you're meeting everything? We'll run a tax review and bring you up to date.
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