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ANYONE RECEIVED THE SAME???

ANYONE RECEIVED THE SAME???

Old Nov 16th 2007, 12:33 pm
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Question ANYONE RECEIVED THE SAME???

Tax returns for all owners of 1 Spanish property who completed prior to January 2007, are due by the 31st December , so if you are not yet sorted, you need to be gathering up all your property information shown below, ready to submit your returns.

Escritura or deeds to the property
Passports for all owners
NIE certificate for all owners
Any outstanding mortgage(s) on the 31st December each year
UK utility bill to confirm your UK address
IBI receipt – the rateable value on the property provided by your local council each year (if available)
Spanish utility bill to confirm your Spanish address
Spanish Wills or previous years Spanish tax returns (if applicable)
Notification of your Spanish bank account details for payment of Spanish taxes
Only 17 days to go!
The Spanish system?

Although the principles are the same, the Spanish way is slightly different - as always! Your local town hall is Spain will individually value your property, not by bands, and this valuation is called your "valor catastral ", which effectively is the rateable value of your property.



A standard % will then be applied to your rateable value, and this will be your annual Property Tax. The % will be determined by your local town hall, and will normall range somehwere between 0.5% and 1%. You would then pay this tax annually, not monthly, by direct debit from your Spanish bank account.

IT GOES ON AND ON...pages of it

is it genuine???
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Old Nov 16th 2007, 12:43 pm
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Default Re: ANYONE RECEIVED THE SAME???

Ive been told by my gestoria that my tax is not due until May 2008.

Is it different for paople who live in the UK and own property here?
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Old Nov 16th 2007, 1:02 pm
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Default Re: ANYONE RECEIVED THE SAME???

Originally Posted by Mitzyboy View Post
Ive been told by my gestoria that my tax is not due until May 2008.

Is it different for paople who live in the UK and own property here?
Which tax does this refer to jennydor?

I think there is a distinction between making the return and paying the calculated tax due, could be December to May Mitzyboy
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Old Nov 16th 2007, 1:06 pm
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Default Re: ANYONE RECEIVED THE SAME???

Not too sure, am I allowed to post the whole thing on here?
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Old Nov 16th 2007, 1:52 pm
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Default Re: ANYONE RECEIVED THE SAME???

Originally Posted by jennydor View Post
Not too sure, am I allowed to post the whole thing on here?
Go on give us a clue!
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Old Nov 16th 2007, 1:56 pm
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Default Re: ANYONE RECEIVED THE SAME???

1. Escritura - or deeds to the property - extremely important for all sorts of reasons, but effectively it proves that you own the property. Many solicitors and banks, where a mortgage applies, seem to hold on to these documents for a long time after completion, so chase them up and at least get a copy.

2. NIE - you need an NIE number in order to buy a property in Spain as a "foreigner" - as part of this process a 1 page document will be obtained which will name you, your passport number and your NIE number - this document again is required in many situations, so you should always have a copy of this document for each of the respective owners of the property.

3. Purchase expenses - all your legal, notary, stamp duty, land registry fees etc should be obtained from your solicitor after completion. These innvoices/receipts are important as you can claim these when you come to sell the property, in order to reduce your capital gains tax bill. Some solicitors, however, are slow to provide evidence of all these


1. Annual Tax Returns

2. Spanish Tax Consultation

3. Spanish Will

4. Capital Gain Tax Returns

The UK system?

As you know, the UK system works on the basis that all our properties are valued according to a local banding system, and each band will then be subject to their annual Council Tax bill. Each year the local council will write to you to inform you of any band changes and the new amount that will be payable over the following year. Normally, Council Tax will then be payable on a monthly basis via direct debit.

The Spanish system?

Although the principles are the same, the Spanish way is slightly different - as always! Your local town hall is Spain will individually value your property, not by bands, and this valuation is called your "valor catastral ", which effectively is the rateable value of your property.


A standard % will then be applied to your rateable value, and this will be your annual Property Tax. The % will be determined by your local town hall, and will normall range somehwere between 0.5% and 1%. You would then pay this tax annually, not monthly, by direct debit from your Spanish bank account.

How do I find out about our "valor catastral"?

Your local town hall will send what is known as an IBI receipt to your Spanish property, and this will detail the valor catastral that they have decided for your property, the local % tax to be applied, and the actual amount of tax that you now need to pay. This IBI receipt will then be sent each year.


Does the "valor catastral" change?

Yes - each year you will see a slight increase in this valuation, and every so often your local town hall may also go through a re-valuation exercise and revise the current valuations. This will be in line with rising property prices.

Is the valor catastral applied elsewhere?

Yes - this valuation is used to calculate your annual income tax liability (for all non-resident property owners, regardless of whether they rent their property or not). Until such a valuation is received, we are allowed to use 50% of your purchase value as an alternative basis for tax.

A problem?

For all new-build properties, unlike the UK, it can take some time for your local town hall to value your new property, and therefore you will not receive your IBI receipt until some time later, and in some areas this can take up to 3 years after completion!

The problem is that you are not required to pay until an IBI receipt is issued, but you will then be liable from the day that you did complete - so in theory, you could have to pay 3 years property tax in one payment! Therefore, be aware, and make sure you save sufficient funds for this future payment.

If you are buying a resale property, ensure that the seller can provide previous IBI receipts and proof of payment, because if they have not paid, you will become liable for that debt.

What do we need to do?

Sit back, relax and wait for your IBI receipt! Or, you could visit your local town hall at some point and ask them about whether a valor catastral has been assessed (they have been known to assess but not inform!) or when they are likely to be assessed.

Each town hall will be different, and their priorities will also be different, so be patient!

Why do I need to do annual tax returns?

The 31st December deadline is not that far away, so a couple of reasons why you need to get yourself sorted and get your tax returns in!

1. Legal Requirement - ALL non-resident property owners are required to submit a tax return each year, and because ownership of Spanish property is essentially a "tenants in common" arrangement, it means that each owner of property will need to submit an individual return for their "share" of the property.


For example, if 4 people own a property, they are are deemed to own 25% each - not jointly owning 100% - and they would therefore be required to account for their 25% each year.

2. Penalties & Interest for Non Payment - if you do not pay the taxes, then at a future date the Spanish tax office could make you liable for the outstanding amount of the taxes, plus interest plus penalities.

3. Impact on Potential Sale - if you plan to sell the property, the potential buyer would normally ask whether all taxes have been paid, and could ask for evidence that this is the case - if there was no such evidence then the buyer could ask for a reduction in the price to cover unpaid taxes, or even worse, withdraw from the sale.

4. Capital Gains Tax - if you do sell the property, and the buyer witholds 3% of the sale proceeds (which is a legal requirement) and pays this to the Spanish tax office - you will then have to make a claim for any overpaid capital gains tax - at this point, if previous tax returns have not been submitted, then the Tax office will deduct all taxes, interest and penalties, before any rebate is made.

Last edited by jennydor; Nov 16th 2007 at 2:02 pm.
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Old Nov 16th 2007, 4:47 pm
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Default Re: ANYONE RECEIVED THE SAME???

Originally Posted by John & Kath View Post
Which tax does this refer to jennydor?

I think there is a distinction between making the return and paying the calculated tax due, could be December to May Mitzyboy
Non residents income/wealth tax is normally declared annually on Form 214.

You can make this declaration at any time during the year after but it must be paid by Dec 31.

In other words tax due for 2006 must be declared in 2007 and paid by the end of 2007.

Residents income tax is declared in the following year between May 1 and end of June. So tax for 2007 must be paid in May/June 2008.
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Old Nov 16th 2007, 4:56 pm
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Default Re: ANYONE RECEIVED THE SAME???

Originally Posted by jennydor View Post
is it genuine???[/COLOR]
It looks like the sort of information a gestor/accountant might require the first time you pay your non resident income tax and wealth tax on your property in Spain.

You don't actually need any of this, you just fill in the form, work out how much you owe and write out a cheque. The only information that actually goes to the tax office is on the form.

The only info on the form is name and address, NIE number, declared value of the property and the catastral value and catastral reference number and the name of your fiscal advisor if you are using one.

These guys like to make it seem more complicated than it is so they can justify their charges. It takes about 5 minutes to fill in the form!
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Old Nov 16th 2007, 5:11 pm
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Default Re: ANYONE RECEIVED THE SAME???

Originally Posted by Mitzyboy View Post
Ive been told by my gestoria that my tax is not due until May 2008.

Is it different for paople who live in the UK and own property here?
My understanding is that "paople" dont need to pay anything.
But most people do!!
LMJ
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Old Nov 16th 2007, 5:28 pm
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Default Re: ANYONE RECEIVED THE SAME???

Originally Posted by lmj50 View Post
My understanding is that "paople" dont need to pay anything.
But most people do!!
LMJ
You can certainly get away with not paying on time but when you come to sell the property you have to pay the taxes and fines.
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Old Nov 16th 2007, 8:09 pm
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Default Re: ANYONE RECEIVED THE SAME???

Non Residents tax returns are due by the 31st of December for property purchases completed before the 1st of January of the same year.
If you own a property in Spain and are not resident you are required to declare ownership of your property to your local tax authority.

For example this year 2007. Any one who completed their property purchase before the 1st January 2007 is obliged to make their return by the 31st of December 2007.

Non residents who only have one property in Spain can present their declaration on tax form 214 ‘Impuesto Sobre el Patrimonio y la Renta de No Residentes’ from the Agencia Tributaria (www.aeat.es).

Regards

David
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Old Nov 16th 2007, 10:14 pm
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Default Re: ANYONE RECEIVED THE SAME???

Originally Posted by jennydor View Post
1. Escritura - or deeds to the property - extremely important for all sorts of reasons, but effectively it proves that you own the property. Many solicitors and banks, where a mortgage applies, seem to hold on to these documents for a long time after completion, so chase them up and at least get a copy.

2. NIE - you need an NIE number in order to buy a property in Spain as a "foreigner" - as part of this process a 1 page document will be obtained which will name you, your passport number and your NIE number - this document again is required in many situations, so you should always have a copy of this document for each of the respective owners of the property.

3. Purchase expenses - all your legal, notary, stamp duty, land registry fees etc should be obtained from your solicitor after completion. These innvoices/receipts are important as you can claim these when you come to sell the property, in order to reduce your capital gains tax bill. Some solicitors, however, are slow to provide evidence of all these


1. Annual Tax Returns

2. Spanish Tax Consultation

3. Spanish Will

4. Capital Gain Tax Returns

The UK system?

As you know, the UK system works on the basis that all our properties are valued according to a local banding system, and each band will then be subject to their annual Council Tax bill. Each year the local council will write to you to inform you of any band changes and the new amount that will be payable over the following year. Normally, Council Tax will then be payable on a monthly basis via direct debit.

The Spanish system?

Although the principles are the same, the Spanish way is slightly different - as always! Your local town hall is Spain will individually value your property, not by bands, and this valuation is called your "valor catastral ", which effectively is the rateable value of your property.


A standard % will then be applied to your rateable value, and this will be your annual Property Tax. The % will be determined by your local town hall, and will normall range somehwere between 0.5% and 1%. You would then pay this tax annually, not monthly, by direct debit from your Spanish bank account.

How do I find out about our "valor catastral"?

Your local town hall will send what is known as an IBI receipt to your Spanish property, and this will detail the valor catastral that they have decided for your property, the local % tax to be applied, and the actual amount of tax that you now need to pay. This IBI receipt will then be sent each year.


Does the "valor catastral" change?

Yes - each year you will see a slight increase in this valuation, and every so often your local town hall may also go through a re-valuation exercise and revise the current valuations. This will be in line with rising property prices.

Is the valor catastral applied elsewhere?

Yes - this valuation is used to calculate your annual income tax liability (for all non-resident property owners, regardless of whether they rent their property or not). Until such a valuation is received, we are allowed to use 50% of your purchase value as an alternative basis for tax.

A problem?

For all new-build properties, unlike the UK, it can take some time for your local town hall to value your new property, and therefore you will not receive your IBI receipt until some time later, and in some areas this can take up to 3 years after completion!

The problem is that you are not required to pay until an IBI receipt is issued, but you will then be liable from the day that you did complete - so in theory, you could have to pay 3 years property tax in one payment! Therefore, be aware, and make sure you save sufficient funds for this future payment.

If you are buying a resale property, ensure that the seller can provide previous IBI receipts and proof of payment, because if they have not paid, you will become liable for that debt.

What do we need to do?

Sit back, relax and wait for your IBI receipt! Or, you could visit your local town hall at some point and ask them about whether a valor catastral has been assessed (they have been known to assess but not inform!) or when they are likely to be assessed.

Each town hall will be different, and their priorities will also be different, so be patient!

Why do I need to do annual tax returns?

The 31st December deadline is not that far away, so a couple of reasons why you need to get yourself sorted and get your tax returns in!

1. Legal Requirement - ALL non-resident property owners are required to submit a tax return each year, and because ownership of Spanish property is essentially a "tenants in common" arrangement, it means that each owner of property will need to submit an individual return for their "share" of the property.


For example, if 4 people own a property, they are are deemed to own 25% each - not jointly owning 100% - and they would therefore be required to account for their 25% each year.

2. Penalties & Interest for Non Payment - if you do not pay the taxes, then at a future date the Spanish tax office could make you liable for the outstanding amount of the taxes, plus interest plus penalities.

3. Impact on Potential Sale - if you plan to sell the property, the potential buyer would normally ask whether all taxes have been paid, and could ask for evidence that this is the case - if there was no such evidence then the buyer could ask for a reduction in the price to cover unpaid taxes, or even worse, withdraw from the sale.

4. Capital Gains Tax - if you do sell the property, and the buyer witholds 3% of the sale proceeds (which is a legal requirement) and pays this to the Spanish tax office - you will then have to make a claim for any overpaid capital gains tax - at this point, if previous tax returns have not been submitted, then the Tax office will deduct all taxes, interest and penalties, before any rebate is made.
Hi jennydor,
I've still got my L plates on regarding the mysteries of Spanish ways.
Is property tax the same as UK rates? Because if it is it's about the same as UK rates or more if you are unlucky enough to be charged @ 1%.
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