Expenses when owninig a property
Expenses related to the ownership of a property in Spain:
When talking about the expenses related to the ownership of a property in Spain, it is necessary to separate the maintenance costs and the non-purely property maintenance related expenses. In this article, I will briefly refer only to the latest.
1.– Council Ownership Tax (Impuesto sobre Bienes Inmuebles — I.B.I.)
The I.B.I. is the short name for Impuesto de Bienes Inmuebles that means a yearly tax applicable to all Spanish properties. The I.B.I. is a local tax to be paid to the Council by the owners of the properties independent of the residential status that goes to maintain the infrastructures and the services of the Town Hall. The tax is calculated as a percentage (Benahavis applies a 0,4%) of the catastral value of the property, or sometimes called tax value.
2.– Rubbish Collection Tax (Basura)
The Basura is a local tax to be paid to the Council by the owners of the properties independent of the residential status that pays for the rubbish collection services of the Town Hall. Each Council establishes its own taxes that may go from a fixed lump sum per year to a percentage of the catastral value.
3.– Annual Wealth Tax (Impuesto de Patrimonio)
This tax is payable by residents and non-residents as owners of a property in Spain and it is fairly complicated so every owner should contact its tax advisor for additional information.
4.– Personal Income Tax
This yearly tax is only applicable to non-residents in Spain. There are two modalities according to whether the property is rented out or not.
- Rented out: the tax base is the yearly income received and declared (any owner has the legal obligation to declare that income) from the rental of the property. The tax is 25% of that amount.
- Not rented out: in this case, the tax base is calculated as 2% of the catastral value. The tax is again 25% of that value.
5.– Community fees
When you live in a condominium of properties, either a building of any class, a complex of townhouses or a community of independent villas where you have common elements to maintain or common services, there will be some common maintenance costs (pool, garden, roads, lights, security, etc.) that will be shared among the owners of the condominium. A yearly budget is prepared by the management body and the fees will calculated, in general, as a percentage (associated to the property) of that budget.
Although it is not compulsory in Spain to have a household insurance, it is highly recommended and it is not worth the risk of not having one.