Monday, 30 November 2009

2008 Non-Resident Property Tax deadline on December 31

Many foreign residents do not know that their 2008 Spanish Non-Resident Property Tax (picture of Form 210) is due by December 31 next. The change from what was previously called a wealth tax to this new one is causing much confusion, particularly as this is the first deadline for it. Part of the confusion lies in that this is not your local rates, or IBI or contribuciones, which are calculated by the local tax office (Oficina de Recaudación, opposite the Town Hall). This is a tax due on from all non-resident property owners, non-resident being defined as anyone of any nationality who owns a property in Spain but does not file a personal tax return to the Spanish government. The relevant form (Modelo 210, image) must be completed separately by each person named on the Escritura (Title Deeds), i.e. three people, three separate declarations (see below). Despite the legalese involved in the Spanish instructions from the Agencia Tributaria (national tax authority), calculating the amount due is in fact fairly simple.>
The key is to find out what the property's Cadastral Value (Valor Catastral) is. This is on the latest IBI (see above) bill you have paid. However, if you don't have that receipt, you can obtain the Cadastral reference number (número de referencia catastral) from the local tax office (see above).

According to the Spanish government, this tax is a preventative measure against the possibility that as a non-resident you may rent out the property and not declare the income from it. If you did so, you would be liable to pay 24% on that income. As a result, and in the belief that many owners do indeed rent out their property to family, friends and others on the quiet, Form 210 puts everyone in the same bag and charges regardless.

The 'fictitious' revenue that comes from this ownership is estimated by law at 1.1% over either 50% of the price of purchase or the cadastral value given by the Town Hall and 24% tax on that amount. For example: a new property bought for €286.000. 50% of the price is €143.000, 1.1% of this amount is the 'fictitious' revenue, or €1.573. Thus the tax payable is 24% of €1.573, so the final due figure is €377,52.

The total amount due is then divided equally among as many people on the Title Deeds. In the example above, then, a property owned by three people would be liable for €125.84 each.

Importantly, much further confusion is that the amount due next December 31 is for 2008, not this year.

If all this seems too confusing, we suggest you consult your gestoría or abogado (lawyer), who will charge a more or less standard fee of €90 for the annual service. You may also get more information and help from your local bank.

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