Useful information for property owners in Spain

Council Taxes, Maintenance fees, Income Tax, etc.
property owners in Spain

Useful information for property owners in Spain

You have just become one of the proud property owners in Spain and you are very happy with your new acquisition. But now, you have some doubts about your new obligations as a property owner in a foreign country. Things like, how do I pay the utility bills? Why do I have to pay a fee to the “Comunidad de Propietarios“? Do I have to pay Income Tax even if I don’t obtain any income at all in Spain? etc…

If this is your case, I am sure that by reading this post, it will make your Spanish experience much easier.

First of all, I’d like to point out that the content of this post is aimed at Non Residents owning a property in Spain (although most of it applies to residents as well).

We will take for granted that you or your lawyer has already completed the purchase, signing the title deeds before the notary, and that the deeds have been registered in the Land Registry, after paying the appropriate taxes. Now, what’s next?

Changing the utility contracts into your name and arranging standing orders at the bank:

Your lawyer will change the utility contracts (electricity, water, etc.) into your name. They will also set up a bank standing order (direct debit). This also includes reporting the change of ownership to the Community of Owners and to the Town Hall. So, here comes our first piece of important advice: the payment by direct debit will make your life much easier, but it is crucial that you always keep enough funds in your bank account to cover all the payments.

Please be aware that once you have authorised the payment by direct debit, the companies or public bodies that are going to send the bills to your bank account don’t have any obligation to inform you about them in advance. So the only way to be sure that you will never miss a payment is to keep a reasonable balance in your account, enough to cover any bill. For a normal 2/3 bedroom apartment, we recommend you “invest” 2.000 Euros (3.000 Euros if your community fees are high), and up to 3.000 Euros por a villa (lower community fees but higher Council tax)  in your bank account and top it up every time the balance goes below that figure. Believe me, missing payments of bills for not having enough funds in the account is the number one problem for foreigners with properties in Spain.

Your duties as a property owner in Spain:

Local Town Hall Taxes

Everyone owning a property in Spain, despite residency status, etc., has to pay the following two taxes to the local authorities (Ayuntamiento or Patronato de Recaudacion):

  • “Impuesto de Bienes Inmuebles” (IBIU). This is the Local Property Tax or Council Tax. Some people call it the “rates”. It is based on the official value “valor catastral” of your property. The amount payable can vary a lot depending on the size and location of your property. For a “normal” 2 bedroom apartment, you can expect to pay something between 400 and 800 Euros per year for this tax.For a villa , between 1.200 and 1.800 Euros approx.
  • “Tasa de Recogida de Basuras”. This is what you pay to the Town Hall for collecting your Rubbish. It is approximately 80 Euros for apartments and up to 200 Euros for a villa.

Community Fees

If your property belongs to a Community of Property Owners (Common hold Community Associations), as is the case for most properties in Spain, and will certainly be the case for apartments, you will have to pay your share in the maintenance costs of the complex. This covers electricity and water for common areas, insurance, employee’s wages, contractors, etc. The payment of this fee is compulsory and the Community of Owners might take you to court if you don’t pay. You also need to be aware that from the moment you signed the title deeds, you committed yourself to respect the community rules. You will also have the right to participate and have your say in the Annual General meetings (AGM) or Extraordinary General Meetings (EGM).

Tax Office – Non Resident’s Tax

If you are non resident, you will also have to pay the Income Tax for Non Residents, even if you don’t obtain any income at all from your property. The obligation stems from being an owner of a property and a non-resident, as the law considers from these facts, that you are getting a deemed income. It doesn’t matter whether you rent your property out or not, even if you don’t receive any real income as such, you are still obliged to present this tax declaration. Please click on this link for more information about this.

Please don’t confuse the Council Taxes with the Income Tax for Non Residents. Council taxes have to be paid by everyone, despite residency status, and the latter must be paid only by non residents. If you are non resident you have to pay both. You can read more about residency/non residency by clicking on this link

Private Home Insurance

Finally, please be aware that it is highly advisable that you take out home insurance for your property in Spain, in order to cover your contents and your Public Liability (possible damages caused to your neighbours) , as these things won’t be covered by the community insurance.

As always, comments and questions are welcome below, and please bookmark this page as we will be updating this post with more useful information in the future.

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