Overseas property news - Spanish wealth tax dumped

Spanish wealth tax dumped

Although yet to be ratified, the abolition of wealth tax approved last April by the Spanish parliament will come into force in 2009...

The liability for the tax has been eliminated by a 100% tax relief. The measure will apply for the Spanish tax year 2008 for which returns are due in 2009. 

Spanish wealth tax is a tax on assets held as at 31st December each year. Residents are taxed on worldwide assets and receive deductions.

Non-residents are taxed on Spanish assets without allowances. The tax rate ranges from 0.2% to 2.5%.

There are still other taxes due on Spanish property. On buying a property in Spain one has to pay 6% transfer tax (ITP) (7% in Andalucia).

If the property is a new build or a resold unregistered property there will be 7% Spanish VAT (IVA) to pay.

Annual local property tax will range from £100 to £400 depending on the size of the property. There may be additional taxes in some areas for rubbish collection and special projects.

If the property is let there will be a tax on the rental income. Only 50% of the net rental income of a Spanish resident is taxable at the normal scale rates from 24% to 43%. Non-residents pay 24% on gross income.

On disposal of the property one is liable for capital gains tax at 18% for residents and non-residents plus a tax on the gain on the land called Plusvalia of 20%-30%.

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