High tax costs for owning multiple homes in Spain

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multiple homes

MADRID – A recent study by the General Council of Economists in Spain highlights the significant tax burdens for owners of multiple properties.

According to their findings, the owner of a standard second home can expect to pay more than 1,300 euros in taxes annually. This amount increases to 3,684 euros for someone who owns not only the primary residence but also a second vacation home and a third rental property.

Three homes, three different taxes

The study, presented last week, is based on an example of a person with three properties: the primary residence purchased for 380,000 euros with a cadastral value of 99,035 euros, the second home bought for 200,000 euros with a cadastral value of 76,167 euros, and a rental property acquired for 150,000 euros with a cadastral value of 51,040 euros.

Tax details

The monthly rent for the rented property is 620 euros, with the landlord covering all expenses except for water, gas, and electricity. Community fees for the entire year amount to 1,200 euros, and the IBI (property tax) is 255 euros. The total value of assets and rights is 600,000 euros, excluding real estate, with no outstanding debts.

Income Tax (IRPF)

No IRPF is paid for the primary residence. For the second home, 837 euros in presumed rental income must be reported. For the rented property, the attributable rent is 2,394 euros after deducting paid taxes. The total IRPF payment amounts to 1,583 euros.

Cogesa Expats

Wealth Tax (Impuesto sobre Patrimonio)

The tax base for the primary residence is 80,000 euros, as the first 300,000 euros are exempt. Therefore, the total payment for this tax is 822 euros.

Property Tax (IBI)

The IBI for the primary residence is 578 euros. As well, for the second home 445 euros, plus 255 euros for the rented property. The total IBI amounts to 1,194 euros.

The tax burden of multiple properties

The General Council of Economists emphasizes that the primary residence enjoys relatively favorable tax conditions, as only IBI is paid annually. However, high-value homes may be subject to Wealth Tax or the Tax on Large Fortunes. Stricter rules apply to the second home, which is taxed under Wealth Tax and IBI. Consequently, the owner must declare presumed rental income for Income Tax.

The advisory body concludes that the owner of a standard second home can easily bear an annual tax burden of more than 1,300 euros. Thus, these figures underscore the financial impact of owning multiple properties in Spain.

Also read: More than half of the houses in Spain bought with no need for a mortgage

Baycrest Wealth

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