When it comes to purchasing a property in Spain, joint ownership of a property brings its own set of considerations and obligations. Whether you are purchasing a holiday home as a married couple, with a friend or partner, or perhaps investing in a rental property with a business partner, it's essential to grasp the basics of non-resident property taxes for joint owners in Spain. In this comprehensive guide, we’ll take you through everything you need to know!
Clarifying Ownership Shares
When multiple individuals jointly own a property in Spain, it's crucial to establish and clarify the ownership shares in good time. By doing this, you can determine each co-owner's rights and responsibilities, including their respective shares of property income and expenses. Clarifying everyone’s shares is a crucial step in submitting your non-resident, Spanish property tax return.
Individual Tax Returns
In Spain, joint owners are required to file their tax returns separately. Each co-owner must report their share of the property and any associated income, or expenses on their individual tax return. Non-residents have to file quarterly tax returns (one per property and per owner).
For instance, if a married couple owns two apartments that are rented out for the entire calendar year, they will have to file a total of 16 tax returns, 2 tax returns per owner in each quarter. However, it’s important to note that the tax is filed separately, meaning that they won’t pay tax twice, as it’s split according to each person’s percentage of ownership.
Important note: Starting from the 2024 tax year, the declaration of rental income will shift to an annual basis, with the deadline for submission set between January 1st and January 20th of the following year.
Coordinating with Co-Owners
Having good communication and coordination with your co-owners is crucial. It's essential to ensure that all co-owners are aware of their tax obligations and, most importantly, properly report their share of the property's income and expenses. It’s important to note that 50% co-owners must declare the same income and expenses for the property, otherwise, there will be discrepancies! Clear agreements and open dialogue can help avoid any misunderstandings.
Non-Resident Tax Obligations
If you are non-resident joint owners, it's important to understand that you are still liable to pay tax in Spain. You will need to file the non-resident tax return (Modelo 210) and pay taxes on your respective share of the property.
The tax rate is the same for imputed and rental income, but what is different is the way that the tax due is calculated. The taxable base for the imputed income tax is calculated by multiplying the
cadastral value of the property, by the imputed percentage.
The taxable base for rental income tax is calculated by the difference between the rental income and the expenses of the relevant quarter, except for Non-EU tax residents who cannot offset expenses.
Deductible Expenses for Rentals
Joint owners in Spain may be eligible to deduct certain expenses related to the property the rent out. Such costs may include taxes, rates and local surcharges (e.g. Property Tax Bill (IBI) Rubbish Collection Bill (Basura), personal third-party services such as administration, surveillance, porter services or similar, costs relating to the drawing up of a lease and legal defence costs, insurance premiums and amounts relating to services or supplies (e.g. electric, gas, water, community fees etc.) It’s highly advisable to keep accurate records of these expenses, as the Spanish tax authorities may request those records during the following 4 years.
Submitting your Modelo 210 with IberianTax
At IberianTax, we understand the challenges faced by non-resident property owners in Spain when it comes to filing their non-resident taxes – which is why we developed online tax-filing software that is specifically designed to make the process simple, accurate and secure. Our software even allows you to complete up to 4 owners per property, making your joint ownership tax return super simple too.
Our entire website is written in both English and German language too, so even those without any previous knowledge of the Spanish language, can compile a tax declaration that is fully in compliance with Spanish tax law!
A Simplified Filing Process
Navigating the complexities of property taxes for joint owners in Spain can be challenging, but we’ve made submitting the Modelo 210 form easier than ever at IberianTax. Our easy-to-use software will guide you through the process in minutes, without the need for expensive accountants. We have streamlined the filing process to eliminate any complexities and have made our platform accessible to everyone. Our user-friendly interface provides clear instructions in English and German, so that you can file your tax return with absolute confidence!
If you want to file your Modelo 210 tax return quickly, efficiently and with complete ease, sign up with IberianTax today.
