Costs of ownership
Before you consider buying a property in Spain, it’s worth looking at the annual costs associated with ownership. It’s doubtful these costs will be substantially different to those associated with your property in your country of residence, but, as well as the standard utility bills that you would expect, there are also various taxes which home owners need to pay annually.
We’ll start with the utilities and will give an approximate annual cost based on our experience of owning and managing properties in the Javea area. We’ll assume a standard 3 bedroom villa which is used for holidays only. Obviously these costs are an approximation as utility bills vary depending on usage.
Most owners will have the following utility bills to consider:
Water bills are payable every 2 months. Owners will pay a standard minimum consumption rate and then a set fee per extra cubic metre used within the billing period. Take note that even if your property is empty during a billing period, the standard minimum consumption rate will still apply.
Approximate annual cost: €450
Gas is usually supplied via gas bottles and can be delivered to your door by various companies in the area. Some larger villas have gas tanks, which require filling annually and some of the more modern urbanisations have communal gas tanks and properties are charged by usage.
Approximate annual cost: €250
Electricity is billed every two months and all properties have meters. If your property has air conditioning or electric heaters then annual costs could be significantly higher.
Approximate annual cost: €400
Telephone bills will depend upon whether you have a fixed line installed in the property. These days, most of our clients rely just on their cell phones for making calls. The internet does not require a fixed phone line as many companies offer decent broadband via satellite dish and this is generally the most economic method of accessing the internet.
Approximate annual cost: €200
Insurance is a must for your property abroad, both for building and contents as it’s likely that the property will be empty for long periods of time. Building and content insurance are usually sold as a package in Spain and will vary depending upon the value of your property and what contents are being insured.
Approximate annual cost: €300
That’s the basic utilities covered but it’s worth bearing in mind that, depending upon what type of property you own, there may be additional annual costs to consider. For example, if you own an apartment or villa within a development that offers community facilities such as gardens or swimming pools then there will most likely be a community charge to pay each year. This will vary from development to development so make sure you know exactly how much you will need to pay each year. Also, if you own a property with a private pool then the pool will require maintenance and this can cost up to €1200 per year.
As well as the utilities and general maintenance costs, owners will also be required to pay annual taxes. These are:
Property Income Tax
The Property Income Tax (or Impuesto sobre la Renta de No Residentes (IRNR)) is payable by non residents and this varies depending upon whether you rent out your property or not. Owners who do not rent out their properties pay tax based on the rateable value (valor catastral) of their property. The tax rate is currently 25% of 2% of the rateable value. Therefore, if your rateable value is €100,000 then the tax payable is 25% of €2000, ie €500. If you do rent your property then you will be expected to pay 25% income tax on any rent you receive throughout the year.
The IBI Tax (or Impuesto Bienes Sobre Inmuebles) is a tax payable by both residents and non residents and is essentially for public services such as road maintenance, refuse collection and street lighting. The amount you pay is once again based upon a small percentage (<1%) of the rateable value of your property.
Finally there is the Annual Wealth Tax (or Impuesto Sobre Patrimonio) which is payable by both residents and non residents and is payable on any assets you hold in Spain. The rate starts at 0.2% for assets up to €160,000 and increases on a sliding scale (up to 2.5%) depending upon the value of your assets.
As you can see, owning a property in Spain can be quite an expensive business and we feel it’s important that prospective owners fully understand the annual costs associated with ownership.
Please note that the figures provided here are for guidance only and if you need any advice on the taxes you will need to pay, then please contact a local tax specialist.