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Discussion Starter · #1 ·
Hello from a newbie.

We are in the process of buying a holiday apartment in the Valencia region. We intend to spend around ten/twelve weeks per year and have no wish to rent it out when we are not there.

I have been told by friends that income tax must be paid, even though we will be making no profit or any money while in Spain.

Can anyone tell me how much this tax will be and how often it must be paid. Is it based on the value of the property?

Thank you in anticipation.
 

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Based on the length of time you wish to use the apartment per year you will not be deemed tax resident and therefore will not be liable for any income tax. You will be liable for certain taxes attached to the property you buy so perhaps that is what your friends meant?
 

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You will certainly have to pay "imputed rental tax" which IS a form of income tax.

It is based on the cadastral value of the property (find it on your IBI bill). I think it is either 1.1 or 2% of the value and then 24.75% of that figure (all depending when the property was last 'valued').
 

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My accountant doesn't think this tax is a form of income tax.... but it is still a tax which has to be paid.
 

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Discussion Starter · #5 ·
Thank you all for your replies.

Despite thinking we had done our research well, we certainly missed this imputed income tax.
Now, knowing the name of this tax, I googled and you are all absolutely correct.

Complete instructions on how to calculate Property Imputed Income Tax can be found on the Tax Office 'Modelo 210' Instructions (in Spanish).

Reading and researching more, it seems as if many people either ignore this tax or, like me, they are ignorant of the fact.

I quote:

“The Agencia Tributaria knows the status of all properties from the IBI and other records and know whether they are owned and occupied. It is a simple task for them to identify which property owners are (a) non-resident and (b) not declaring their taxes. In fact they have recently begun chasing non-payers with letters demanding that non-resident taxes (or resident taxes if applicable) are paid.

That said, many people go years without being caught up in tax office investigations. The problem often only rises to the surface when non-residents come to sell their property. It comes as a surprise to many who sell their holiday homes that their return is adjusted accordingly due to tax arrears, fines and interest owed. In this case the seller is obliged to pay 3% of the sale price to the tax office, which is only recoverable by the non-resident seller when they are up to date on taxes including capital gains tax on the sale and, increasingly, the Form 210 tax. This may then require multiple tax returns to be submitted going back several years with fines and penalties.”

We have been quite insistent with our lawyer to give us all the information we need, so to give him the benefit of the doubt, I will say at this point in time - it is early days!
 
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