AS the crisis deepens and Inland Revenue (Hacienda) coffers dry up faster, foreign property owners have become the target of a new tax levy campaign, it seems.
There are plenty more Hacienda letters being sent out and it seems that property owners who did not pay Non-Residents Property Income, an annual tax based on the rateable value (valor catastral), are being traced.
Previously they were deemed to be under the radar of the tax man, but now they are being chased.
The letters, while not openly threatening, are a reminder that taxes have to be paid just by virtue of owning a Spanish property.
The written request simply states that, based on information Hacienda holds, individuals who own property have failed to submit a tax return declaring it.
The letter then goes on to state that this is neither a tax request nor the commencement of an investigation, just a reminder. But it is clear the authorities have all the information that owners were hoping would not be picked up until the property was sold. For then it would have had to be disclosed – and taxes paid up – if a three per cent Capital Gains Tax retention was to be claimed back.
This obviously does not affect tax-paying property owners, who file their annual returns prior to December 31 and are expected to pay between 200 and 800 euros per property, depending on its size and the municipality where it is situated.
As of this year owners will be taxed again, having to submit the tax returns in 2012 and 2013, respectively.
Larger villa owners pay substantially more than flats, while resident property owners, it should be made clear, are exempt from this tax.
Expats who are ‘resident’ have tax breaks on their habitual home, up to a certain value, and an allowance of €700,000, which means that most are exempt.
But do remember, non-payment of taxes will attract penalties, surcharges and interest and ultimately, a charge on the property.
So, to avoid unpleasant surprises, we suggest you act promptly by talking to a qualified professional, such as a lawyer or accountant.
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