When delving into the financial considerations tied to property ownership in Spain, it becomes imperative to distinguish between maintenance costs and expenses not directly related to property upkeep. In this article, we will specifically focus on the latter.
1. Council Ownership Tax (Impuesto sobre Bienes Inmuebles I.B.I.)
The I.B.I., an abbreviation for Impuesto de Bienes Inmuebles, stands as an annual tax applicable to all Spanish properties. This local tax, irrespective of residential status, is paid to the Council and contributes to maintaining the infrastructures and services provided by the Town Hall. Calculated as a percentage (Benahavis, for instance, applies a 0.4%) of the catastral value or tax value, the I.B.I. is a crucial aspect of property ownership.
2. Rubbish Collection Tax (Basura)
The Rubbish Collection Tax, another local tax, is paid to the Council by property owners, regardless of residential status. This tax funds the rubbish collection services provided by the Town Hall. Each Council sets its own tax rates, ranging from a fixed lump sum per year to a percentage of the catastral value.
3. Annual Wealth Tax (Impuesto de Patrimonio)
Applicable to both residents and non-residents owning property in Spain, the Annual Wealth Tax is a nuanced aspect that requires expert advice for clarity.
4. Personal Income Tax
Exclusive to non-residents in Spain, this yearly tax has distinct modalities based on whether the property is rented out or not. For rented properties, the tax is 25% of the declared income, while for non-rented properties, it is 25% of 2% of the catastral value.
5. Community Fees
In condominiums, whether comprising buildings, townhouse complexes, or communities of independent villas, shared maintenance costs for common elements (pool, garden, roads, lights, security, etc.) are distributed among property owners. A yearly budget is prepared, and fees are calculated as a percentage associated with the property.
6. Insurance
Though not compulsory in Spain, having household insurance is strongly recommended. The potential risks far outweigh the cost of ensuring your property's protection.