Do I pay Spanish tax on a house I never let out?

Owning a house in Spain without living in it puts you inside the Spanish tax system in a small but permanent way. None of it is unusual and none of it is a reason not to buy. It does need somebody to file it, and that somebody is legally you.

IBI, the local property tax

Every property pays IBI to its town hall, based on the cadastral value rather than on what you paid. It arrives on a schedule set by the municipality and is normally straightforward to pay by direct debit. If you have just bought, check that the bill has actually moved to your name and your account, because an unpaid IBI attaches to the property.

Non-resident income tax on a house that earns nothing

This is the one that surprises people. Spain treats a second home available to its non-resident owner as producing an imputed income, and taxes that income annually. The house does not have to be let. It does not have to be used. It simply has to be yours and not your main home.

It is declared on a return you file rather than a bill you receive. Nobody sends you a reminder. The amount is calculated from the cadastral value and the applicable rate, and the rate is not the same for everyone: whether you are resident in an EU state affects it, which is why British owners saw their position change after Brexit.

If you do let it out

Letting income is declared separately and more often than once a year. What you may deduct from it also depends on where you are tax resident. If you are moving from never letting to letting occasionally, tell your adviser before the first booking rather than after the first tax year.

Wealth tax

Spain also has a wealth tax that can reach non-residents on their Spanish assets above a threshold. Most owners of an ordinary second home are well under it. Owners of something substantial should ask specifically, and should ask about Catalonia rather than about Spain in general, because the regions differ.

What we would actually suggest

• Use a Spanish tax adviser for the annual filings. It is not expensive and it is not a good place to save money.
• Set the IBI up by direct debit from a Spanish account and check the first one lands.
• Keep the completion deed and the cadastral reference somewhere you can find them, because every one of these filings asks for them.
• If you have owned for years and never filed the non-resident return, raise it now. Regularising it voluntarily is a very different conversation from being found.

We are property people, not tax advisers, and this page is orientation rather than advice. What we can do is tell you which of these apply to your property and put you in front of someone who does this every day.