Imputed Income Tax in Spain

As we explained in our previous post, if you own property in Spain you need to file a tax report even if you are not receiving rental income from it. In this post we will explain about it all.

Just to recap on the types of income and its associated taxes:

Income derived from properties located in Spain is subject to Non-Resident Income Tax. If a property is owned by a married couple or several people, each of them is an independent taxpayer who must file separate returns (unless a delegation procedure has been done upfront that would allow one spouse to do the tax declaration for both).

The income that can be obtained by taxpayers who own real estate are:

1. Imputed income, if the property is for own use or is unoccupied
2. Income from leased properties, if the property is rented
3. Capital gain, in case of sale of the property

In this post you will learn all around the first point, imputed income of property for own use

For reference this is covered in Article 13.1.h of the IRNR Law (Impuesto sobre la renta de no residentes) as well as articles 24,25 and 26.

In accordance with the Double Taxation Conventions, income obtained from immovable property may be taxed in the State in which the immovable property is situated, whether it derives from direct use or enjoyment, from the lease or any other form of exploitation thereof.

The tax base corresponding to the imputed income of real estate located in Spanish territory will be determined in accordance with Personal Income Tax regulations. For these purposes, the amount resulting from applying the percentage corresponding to the cadastral value of the property, which appears on the receipt of the Property Tax (IBI), must be computed as income:

• Real estate located in municipalities in which the cadastral values have been reviewed, modified or determined through a collective valuation procedure of a general nature, in accordance with cadastral regulations, and have entered into force in the tax period or within the term of the ten previous tax periods: 1.1% (the year of collective valuation of a general nature of a Municipality can be consulted in the section Presentations of Values of the Portal of the Directorate-General of Cadastre, https://www.catastro.meh.es)

• Other properties: 2%

In summary you will multiply your “Valor Catastral” by either 0.02 or 0.011 and that will be your imputed income. The resulting amount refers to the entire calendar year. It will be reduced proportionally to the number of days, when it has not had ownership throughout the year, or when it has been leased during part of it. Note that if part of the year the property is empty and part of the year the property is rented, then you need to make two different calculations and file different tax reports for each situation.

If on the date of accrual of the tax (December 31) the properties lack cadastral value or it has not been notified to the owner, 50% of the highest of the following values will be taken as the basis for imputing them: the price, consideration or acquisition value of the property, or the value of the property verified by the Administration for the purposes of other taxes. In these cases, the percentage will be 1.1%.

In the case of real estate under construction and in cases where, for urban reasons, the property is not susceptible to use, no income will be estimated.

In the case of timeshare rights of immovable property, the imputation will be made to the holder of the real right, prorating the cadastral value according to the annual duration of the period of use. However, imputation of real estate income to the holders of timeshare rights of immovable property will not be applicable when its duration does not exceed two weeks per year.

In cases where the ownership corresponds to several people, the income corresponding to the immovable property or real right of enjoyment in question, will be considered obtained by each of them in proportion to their participation in said ownership.

The tax rate is the general one in force:

Residents EU, Iceland, Norway and, from 11-07-2021, Liechtenstein: 19%

Other taxpayers: 24%

Note that you will not be able to apply expenses (such as maintenance) as deductions.

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