We were recently told by one of our clients that the UK Inland Revenue had contacted him about non payment of his Spanish Property Tax.

This must have come about because of the tax treaty between Spain and UK, which allows for sharing of fiscal information, but it’s the first time we’ve heard of this actually happening.

It’s another good reason to stay ahead of the game but making sure your non-resident property tax is paid up to date. Remember, your tax for 2011 is due this year, and you can back pay it up to four years to bring yourself up to date.

Have you been contacted about this by your home country Inland Revenue? If so, please let us know.

Home insurance tends to be a little less expensive in Spain than in many northern European countries. With your policy you can opt for buildings cover, contents cover, or both.

If you have a mortgage, your lender will insist on the former, but do get a comparative quote as banks premiums can be very high. Bear in mind that the buildings cover needs only to cover the cost of rebuilding the property, not the actual value of it. Depending on how much land you have, the re build cost could be substantially lower than the actual value.

Most contents cover is for anything that isn't actually part of the structure of the property, but bear in mind there may be limitations on items like cash or jewellery.

Renting Your Property Out

If you rent your property when not using it, either for holidays or on a long let, you'll need to let the insurer know, and you may have to pay an additional premium. For rentals, it's also well worth considering some element of third party liability cover, in case accidents happen.

As with anything, home insurance can vary considerably in price, and it's not always the most expensive premiums that offer the best cover. So get advice from a local broker and check exactly what you get for your money before you part with your cash.

More:

1/ Ignore the non resident property tax at your peril

2/ What are NIF and NIE numbers?

3/ What is IBI in Spain?

1/ Pre Contract, or Promesa de Compraventa. This isn't always used, but it's a very simple agreement in which one party agrees to sell and another agrees to buy a property. No money changes hands between the two parties, but often an agent will hold a deposit at this point.

More common at this stage is an Option To Buy Agreement, or a Contrato de Opcion Compraventa. With this type of contract the buyer is getting the exclusive right to buy a property in return for an agreed deposit sum. In this case if the buyer withdraws, they lose their deposit, and it's often the case that if the seller does so, they lose double the deposit received.

2/ Private Contract, or Contrato Privado de Compraventa. This will specifiy, in great deal exactly what is being bought, what is being sold and in what time frame. There is almost always a 10% deposit paid with this type of contract, and once again, it's very common for a double penalty if the seller withdraws.

IBI, or Impuesto sobre bienes inmuebles, is the local rates or council tax that you pay the local authority where your property is situated. It covers things like street lighting, local roads, running the town hall and local amenities. But it doesn't cover rubbish collection, which is paid separately.

Most people pay their IBI by standing order, but you can pay it in person at your local Ayuntamiento or town hall. Late payment will usually result in interest payments being added to the total.

The calculation for IBI is quite complicated, but it's based on the Catastral value of your property, just like the non resident property tax. This is usually lower than the actual value of the property as catastral values are only periodically updated. The local authority will then levy a charge of a small percentage of that value, for example 0.3%. In that example on a property with a catastral value of €150,000, the IBI would be €450 per year.

People often confuse IBI with the non resident property tax, but they are completely separate and paid to two different bodies.

The latter is only paid by non resident owners and is paid to the Hacienda, or Spanish inland revenue.

Some non resident property owners in Spain have chosen to ignore the tax they are obliged to pay on their properties.

It's a mistake, because:

1/ Ignorance of the law is not accepted as an excuse

2/ Declaring late or not at all will incur a fine

3/ It's very easy for the tax authorities to impose an embargo on your bank accounts or property

Don't fall into the trap of believing your tax is taken care of in your own country.

The tax authorities are clamping down now, as Spain needs more income. They are checking with the land registry, and even with the electricity companies, to get a clear picture of who owns what properties and whether they are continuously occupied.

Don't risk it - the tax is not expensive, and thanks to Taxes on Line, it's now easy to pay!

Just click here to be reminded: Spanish non resident property tax

Confusingly, the number issued for both your NIE and NIF is the same! And that number will also be used for your residencia, and your driving licence if you apply for a Spanish one.

The NIE is your Numero Identificacion Extranjero - simply a number which identifies you as a foreigner, and the "F" is NIF is for fiscal, which identifies you for tax purposes.

You need the numbers to buy a property and to enter into any contract for water, electricity or telephone service.

You can apply for your numbers at any National Police Station, and you should do so in person. You'll need to take your passport and fill in the relevant forms and you will then be given a slip to pay the administration fee into a bank. You can then return to the police station with your completed forms and the stamped paying in slip, at which point your certificate will be issued to you. The next step is to register the NIE with the AEAT to convert the number into a NIF.

Many people employ someone to translate and help them with the process, and many estate agents and lawyers offer that service.

Please note that if you decide to apply for your NIE number without the assistance of a professional ( eg. tax advisers, lawyers, etc) please DON´T FORGET to register the NIE with the AEAT ( Spanish inland revenue) to convert it into a NIF number. This is quite simple and it avoids future complications that will arise when you come to pay your first Modelo 210.