# Non Resident Tax when Buying



## Esprit9 (Aug 4, 2018)

I'm getting different numbers on being taxed as a Non Resident buying a flat:

* On a 200,000euro apartment flat, I believe I will pay 12%-15% on taxes?

* Then I pay annual property tax (Valencia area)? How much?

* If I ever sell the flat as a non resident (In 10 years or so to upgrade), I would be taxed again? How much?

* If I rent it out when I am not there, I will be taxed 28% on any profit?

WOW... Is this true?

Is my research off?

Thanks in advance,

Ed-


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## Nomoss (Nov 25, 2016)

Hows about indicating (by the flags) where you are from, by completing the "Expat From" and "Expat To" sections in your profile?

Simples


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## Esprit9 (Aug 4, 2018)

Updated Profile!



Esprit9 said:


> I'm getting different numbers on being taxed as a Non Resident buying a flat:
> 
> * On a 200,000euro apartment flat, I believe I will pay 12%-15% on taxes?
> 
> ...


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## Nomoss (Nov 25, 2016)

I am not fully up to date on property tax, but these are the basics, unless they have changed drastically in the last few years.

There is a transfer tax on all property changing hands, which is collected by the Notario handling the transaction. This together with his (fixed, standard) fees is around 10% of the price of an average property. 

Annual property tax is quite low, in the order of a few hundred Euros for a city apartment. It is based on the taxable value of the property, the Valor Cadastral, not what you paid, but a much lower figure, and its location. It is advisable to ask how much it is (and to see the latest receipt) when considering a property. It is called "IBI" - Impuesto sobre Bienes Inmuebles.

Details of other taxes are here https://www.ptireturns.com/spain/property-tax-return

Some people may suggest you agree to putting a lower price on the purchase documents (Escritura) to save part of the 10% tax payable on the purchase.

Remember that this will show a greater profit when you sell, which will be taxed at 19% (or perhaps more by then), and after you take into account the purchase and selling costs, which can be subtracted from the gain, you may not even make a profit when the true figures are declared.

I made a small loss on our final property we sold in 2010, but it took over two years to recover the 3% of the sale price withheld, and which cost me several 100 €'s in gestor fees, plus 3 or 4 trips to Gerona, fortunately only a couple of hours drive from our home in France.

I also found out, too late, I needed to have a representative in Spain to receive any correspondence from the tax people, as they won't post official letters out of Spain, although they send letters telling you to collect official letters from them!

This is just any trusted friend or gestor, etc., not a Fiscal Representative, which was required up until the 1990's.

I may be out of date on the above, in which case I'm sure someone will correct me.


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## Esprit9 (Aug 4, 2018)

Thank you. This is really good information. All of this seems fine.. I wonder if there is a way to not pay such high taxes when we sell/upgrade to another apartment.. Just seems so high.

I buy an apartment flat in Valencia for $200,000euros in 2019 and then in 2030 the same flat is now worth $250,000. I go to sell that same flat to move into a better apartment in 10 years and I pay over 40,000euro in taxes! Yikes...


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## snikpoh (Nov 19, 2007)

Nomoss said:


> I am not fully up to date on property tax, but these are the basics, unless they have changed drastically in the last few years.
> 
> There is a transfer tax on all property changing hands, which is collected by the Notario handling the transaction. This together with his (fixed, standard) fees is around 10% of the price of an average property.
> 
> ...



The main one you've forgotten to mention is what people call "non-resident tax" or, more accurately, second-home tax.

This is based on the imputed rental of the property - again it isn't much but MUST be submitted and paid annually.


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## Lynn R (Feb 21, 2014)

Esprit9 said:


> Thank you. This is really good information. All of this seems fine.. I wonder if there is a way to not pay such high taxes when we sell/upgrade to another apartment.. Just seems so high.
> 
> I buy an apartment flat in Valencia for $200,000euros in 2019 and then in 2030 the same flat is now worth $250,000. I go to sell that same flat to move into a better apartment in 10 years and I pay over 40,000euro in taxes! Yikes...


In a word, no there isn't a way to avoid the taxes when selling one property and buying another. I did that last year, and it's very costly, there's no doubt about that. 

There is one more tax when selling a property which hasn't been mentioned yet, and that is the "plus valia" municipal tax which is based on the increase in value of the land the property is built on since it was purchased. Until now, that has been charged based on the official value of said land, irrespective of whether the property was sold at a profit or not (and due to the Spanish property crash, many properties have been sold at a loss during the past few years). I had to pay just over €4k in plus valia, having owned the house for 13 years, and I only broke even on selling. A fairly recent Spanish Supreme Court judgement, however, has ruled it illegal for local authorities to charge plus valia if no profit has been made on the sale. This being Spain, however, putting the ruling into practice is taking a long time and vendors have still been having to pay it and claim it back if they sold at a loss (a lengthy process). If you sell as a non-resident, the amount of the plus valia will be retained from the sale proceeds by the buyer's lawyer and paid to the municipality by them (as well as 3% of the sale price being retained against capital gains tax liability) - this is to avoid the possibility of a non-resident leaving the country and not paying.


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## Nomoss (Nov 25, 2016)

snikpoh said:


> The main one you've forgotten to mention is what people call "non-resident tax" or, more accurately, second-home tax.
> 
> This is based on the imputed rental of the property - again it isn't much but MUST be submitted and paid annually.



Oh no I didn't. Sr 'Opkins  I had to pay it for years after I stopped being a resident, and had kept an apartment.

It's mentioned in the article by Spanish Property Services which I linked to.
This was just a convenient reference, I'm not recommending them.

They refer to it as "Deemed Rental Income". It's not a lot, but annoying.

I also understand that actual rent received must now be declared and paid quarterly. 

In 2005, when we bought the apartment, there was also an annual wealth tax (Impuesto sobre el Patrimonio) for non resident property owners, of between 0.2% and 2.5%, rising with the value, based on the highest of: the Valor Cadastral, the value calculated by the Administration for other purposes, or the purchase price, loan value, or real acquisition value (e.g. for an inheritances)

This was abolished in 2009, and was in addition to the Municipal tax (IBI), paid locally.

So don't complain too much, you probably have to pay property and capital gains taxes in your own countries

When we took out a small mortgage to buy another property for the business in 1990, we had to pay around 2% wealth tax on the amount of the loan, as it was considered to be an increase in our Patrimonio. This may still be the case, actually.


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## Nomoss (Nov 25, 2016)

Esprit9 said:


> Thank you. This is really good information. All of this seems fine.. I wonder if there is a way to not pay such high taxes when we sell/upgrade to another apartment.. Just seems so high.
> 
> I buy an apartment flat in Valencia for $200,000euros in 2019 and then in 2030 the same flat is now worth $250,000. I go to sell that same flat to move into a better apartment in 10 years and I pay over 40,000euro in taxes! Yikes...



I don't follow your calculation. Your gain would be $50,000, less your buying and selling costs, including agents' and lawyers' fees.

Say, $20,000 tax + $2,000 fees buying and $25,000 fees selling = $47,000, leaving a net profit of $3,000, taxed at 19% = $570.

It might be a bit more, depending on agents' fees, but not €40,000.


EDIT: If you become a resident you may pay a lot less, but of course, you'd be taxed on your worldwide income


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## Bigus Dickus (Aug 12, 2018)

Esprit9 said:


> I'm getting different numbers on being taxed as a Non Resident buying a flat:
> 
> * On a 200,000euro apartment flat, I believe I will pay 12%-15% on taxes?
> 
> ...


Resident or non resident the taxes are the same when buying or selling. Go see a good lawyer and tax adviser (if you can find one) that is their purpose in life.


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## Nomoss (Nov 25, 2016)

Bigus Dickus said:


> Resident or non resident the taxes are the same when buying or selling. Go see a good lawyer and tax adviser (if you can find one) that is their purpose in life.


Not correct.

See Capital gains tax in Spain | Ábaco Advisers


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## Esprit9 (Aug 4, 2018)

Are the buying and selling taxes for Non Residents the same in Portugal as in Spain?


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## snikpoh (Nov 19, 2007)

Nomoss said:


> Oh no I didn't. Sr 'Opkins  I had to pay it for years after I stopped being a resident, and had kept an apartment. But you didn't mention it directly
> 
> They refer to it as "Deemed Rental Income". It's not a lot, but annoying. I mentioned that - it's also know as imputed rental tax
> 
> ...


.....


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## Nomoss (Nov 25, 2016)

Nomoss said:


> I am not fully up to date on property tax, but these are the basics, unless they have changed drastically in the last few years...................
> ................ I may be out of date on the above, in which case I'm sure someone will correct me.


I didn't expect the reaction I received.


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