10th October 2009: Spanish Algarve Property News
Following a number of enquiries about Spanish income tax for non residents we have the following information. In a nutshell, wealth tax was abolished in Spain as of 01//01/08 and was replaced by Income tax. This applies to each property owned by someone who is not a registered Spanish resident.
Income tax is set at 24% of the rateable value of the property. The rateable value is currently set at 2% of the value of the property.
An example … Property valued at 100,000 Euros Rateable value @ 2% = 2,000 Euros Income tax due @ 24% of the 2000 = 480 Euros.
Income tax for 2008 needs to be paid by 31/12/09 to avoid an automatic 20% fine and thereafter interest calculated daily until such time as it is paid.
If there is more than one owner, then each owner needs to submit an income tax return (the income tax due will obviously be divided between the owners).
Rental income tax is completely different and applies to owners who rent out their properties. It is set at 24% of gross rental and you cannot offset any costs!
We make no suggestions or recommendations about the above and are simply telling you what the law is. There is a very useful web site: www.numerological.co.uk that would be good to have a look at. It contains a lot of free information about the above issues as well as other things, e.g. Spanish wills.
If you require any further information, please contact Gary at Numerological. Contact details are on the web site.