What taxes must a non-resident with a house in Moraira-Teulada pay?

When someone who doesn’t live in Spain decides to buy a property in our country, one of the first questions they usually ask themselves is: How much tax will I have to pay on my property every year?

In addition to the inherent costs of the transaction itself, the expenses that we have to face on a regular basis once we have acquired the property can have a direct influence on both the type of property we are going to buy and its location.

So, are the taxes paid by a non-resident with a house in Moraira the same as the taxes paid by a permanent resident in Spain? Below we will describe in detail the taxes that a non-resident with a home in Moraira must pay.

Property Tax (IBI)

Property tax, commonly known as IBI, is an annual tax payable by residents and non-residents alike and is levied on the ownership of a property.

To find out how much a non-resident will pay for the IBI on their property in Moraira-Teulada, they first have to find out the property’s cadastral value. A multiplication coefficient will be applied to this value, which varies depending on each Council.

Moraira-Teulada Council applies the following values for properties in the municipality:

• Rural property: 0.6%
• Urban property: 0.512%

Example of IBI in Moraira-Teulada

If, for example, we’re going to buy a property in Moraira-Teulada with a cadastral value of 95,000 euros, to work out how much IBI we will have to pay we do the following calculation:

95,000 x 0.512%/100= 486.4 euros.

In some cases, there are reductions that can be applied to reduce the total amount due.

Non-Resident Income Tax (IRNR)

Even if the owner of the property lives abroad, they are required to declare the profits or possible profits from the property to the tax office. Non-Resident Income Tax is calculated on this declaration and the amount will depend on the use of the property in question.

Housing for own use

The Inland Revenue assumes that any property is capable of generating profits, so even if we do not rent the property out, we will have to pay tax on it. In this case, a percentage must be applied to the cadastral value of the property which will vary depending on whether it has been reviewed in the last 10 years:

• If the cadastral value has been reviewed in the last 10 years, we will apply 1.1%.
• If the cadastral value hasn’t been updated in the last 10 years, we will apply 2%.

The value resulting from applying this percentage to the cadastral value will give us the taxable base, a figure to which we will have to apply the corresponding tax rate: 19% for residents of the EU, Iceland and Norway and 24% for all other taxpayers.

Rented housing

If, on the other hand, the property is rented out, the income to be declared will be the total amount charged to the tenant, without deducting any expenses. The corresponding tax rate will be applied to this taxable base in the same way as in the previous case (19% or 24%).

Wealth Tax (IP)

Wealth Tax is another of the taxes that non-residents with a house in Moraira pay. This tax was abolished in 2008 only to be recovered in 2011 due to the financial crisis and the considerable amount of revenue it generates for the autonomous regions.

Wealth tax affects anyone who owns a property in Spain, regardless of whether they are a resident or non-resident.

As it is a regional tax, in Moraira we have to refer to the regulations applicable to the Valencian Region. There, we see that amounts up to 500,000 euros are exempt from this tax. This means that the first 500,000 euros of wealth will not be taken into account.

And what taxes are paid upon selling?

It may also be interesting to know the taxes that non-residents have to pay upon selling property in Moraira. These are as follows:

• Municipal Capital Gains Tax: this is levied on the increase in value of a property during the time it has been owned by the seller. In Moraira, the tax rate is set at 30%. To find out what you will have to pay in Municipal Capital Gains Tax in Moraira, you can download Hispania Homes’ automatic calculator.

<< Download Moraira Capital Gains Tax Calculator >>

• Non-Resident Income Tax (IRNR): upon selling, Non-Resident Income Tax (IRNR), a tax calculated on the difference between the transfer value and the acquisition value of the property, will also have to be paid.

Calculating the taxes involved in the purchase or sale of a property isn’t always an easy task, especially when the person is a non-resident and is not familiar with our taxes.

Hispania Homes is an agency specialising in buying, selling and renting in the municipalities of Moraira, Benissa, Altea, Jávea and Benitachell. If you’re interested in buying or selling in one of these areas and you want to do so with a friendly real estate agency, don’t hesitate to contact us.