Property owners on Lanzarote are subject to several taxes, but those who are non-resident also have specific taxes to take into account. It’s something that, for many people, will require expert legal assistance and advice.
First published on June 1st, in the Gazette magazine.
As a property owner, you are obliged to pay the IBI tax (similar to council tax) that is paid every year by your local Town Hall. IBI stands for Impuesto de Bienes Inmuebles (Tax on Fixed Assets) and is a municipal property tax similar to the Council tax payable in the UK.
However, if you are a non-resident owner, you should also be aware that you are also obliged to pay another tax known as the ‘non-resident tax’ each year:
If you own a property in Spain, and you are not normally resident in Spain i.e. you use your property as a holiday home only, then you will be liable to pay IRNR (Tax on Non-Resident Income). This tax is due on any property purchased before 1st January of the current year and it is payable on or before 31st of December of the current year.
IRPF – TAX ON RENTAL INCOME
If you rent out your property to tourists, you are required to pay tax on any income derived from this economic activity. It should be noted that the Spanish tax office is actively investigating advertisements for rental properties in Spain in order to ensure that homeowners are declaring such income.
Erardo Ferrer of Lanzarote Abogados says “If you don’t pay this tax each year, this will have an effect on the capital gains tax that will be due when you do eventually sell the property. There will also be a surcharge for interest, if you do not pay this tax annually, when you go to sell your property in Spain, this will affect the tax to be paid for the capital gain from the sale and with an interest surcharge. For this reason, we recommend that you keep this tax paid up to date.”
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