How much does it cost you to keep your empty property in Spain? (Part 1)

Let me apologies first for bringing up this impertinent issue. I know this is not the appropriate time to ask this socially incorrect question.

 

But if you include taxes, services supplies and insurance, the bills could soar up to over 2,000 Euros a year for a house of 80 square meters. But if you include taxes, services supplies and insurance, the bills could soar up to over 2,000 Euros a year for a house of 80 square meters.


In midst of this crisis, to sell a flat has become quite an achievement. The high unemployment rate, resistance to lower the selling prices and credit restrictions have allied against thousands of expats who want and need to get rid of their property to get financial liquidity. In many cases, in addition, the sale of a house (often inherited) serves to get rid of a lot of payments, since having the house empty is quite expensive.


Having a house without any tenants does not exempt one from payment of the local taxes and a minimum consumption of domestic supplies. A property of about 80 square meters could pay an average of about 2,000 Euros in total costs and that would be a property without having extra charges as large common areas gardens or golf courses fees etc.


Fixed costs on your property in Spain.

For many investors, real estate has meant a very attractive investment asset for a long time. Their annual revaluation or profitability that could be obtained via rental reported succulent revenues, comparable with the investment in the long run in stocks or mutual funds.


However, as an investment asset, you must not forget that maintenance costs associated with a property are far superior to any other financial instrument.


While shares, funds, bank deposits or pension plans can be associated commissions ranging between 0% and the annual 1.5% on the invested amount, the buildings have to carry a series of fixed and variable expenses that may involve the payment of more than 2,000 Euros per year for an average dwelling of about 80 square meters.

 

Taxes associated with the property are diverse and are rising.

Therefore, let us drive out the myth that to have an empty apartment costs nothing. It is not true. Anyone with an empty home, maybe because it is inherited, because at the moment there aren't any tenants available or because it is desired to be kept empty for the occasional visit to Spain, should know that it is a practice that involves a series of costs that may not be evaded. Taxes associated with the property are diverse and are rising. To these must be added the basic domestic services supplies such as water, electricity or gas, mortgage (if any), contributions to the community of owners, any unexpected costs, as extra charges from community of owners, etc.

 

Unavoidable housing tax.

An empty property does not exempt one from the payment of taxes associated with it, which are varied. First, one the inexcusable that must be tackled is the real estate tax IBI or Impuesto de Bienes Inmuebles. It applies both to urban real estate, as country homes or those with special characteristics. All homes in private hands, whatever their nature, are affected by this tax. The amount is calculated according to the rateable value.


The land registry (Catastro) is the body which classifies the origin of the title of real estate or real rights established. The values of the real estate are updated on a regular basis. This figure is used for the calculation of the tax. Urban real estate, , pays a 0.4 as a minimum % and a maximum, and 1.10% on its theoretical value calculate in the land registrar, (Catastro). The country buildings pay an IBI between a 0.30% and a 0.90% of its theoretical value.


In the case of houses that were bought with a garage, the owner will receive two invoices from the IBI, one for the house as such and the other for the garage. And if recently purchased a building with storage room, they will receive a third invoice of IBI. The payment of real estate tax for garages and storage rooms is, also, unavoidable.


In this case, the amount around 60 Euros for a garage type of about 14 square meters. A storage room can assume the payment of about 10 Euros in IBI.

 

For a House about 80 meters, without garage or additional store room, the IBI can be of approximately 400 Euros per year. With an associated garage, the tax will be increased to 450 Euros. Obviously, the bigger the property, the greater the payment of this tax will be. A house of 100 meters can bring associated to an IBI receipt of about 500 Eros per year.


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