As an American citizen owning property in Spain, you face unique tax obligations that other nationalities don't encounter. The US is one of only two countries (along with Eritrea) that taxes citizens on worldwide income regardless of residency.
Key US Tax Requirements for Spain Property Owners
FBAR (FinCEN Form 114)
If your aggregate foreign financial accounts exceed $10,000 at any point during the calendar year, you must file an FBAR. This includes:
- Spanish bank accounts
- Mortgage escrow accounts
- Property management accounts
- Community (homeowners association) fee accounts
Deadline: April 15 (automatic extension to October 15)
Penalties: Up to $12,909 per violation for non-willful failures; criminal penalties for willful violations
FATCA (Form 8938)
Form 8938 reports specified foreign financial assets if they exceed certain thresholds:
- Living in the US: $50,000 on last day of year or $75,000 at any time
- Living abroad: $200,000 on last day of year or $300,000 at any time (single filers)
Rental Income Reporting
If you rent your Spanish property, you must report the income on your US tax return (Schedule E). However, you can offset this with:
- Spanish taxes paid (via Foreign Tax Credit)
- Depreciation (27.5 years for residential property)
- Operating expenses
US-Spain Tax Treaty Benefits
The US-Spain Double Taxation Treaty helps prevent paying tax twice on the same income:
- Article 6: Real property income may be taxed in Spain
- Article 13: Capital gains from real property sales may be taxed in Spain
- Article 22: Foreign Tax Credit provisions
Capital Gains Considerations
When selling Spanish property:
- Spain taxes non-residents at 19% on gains
- The US also taxes the gain (at your marginal rate or 15-20% for long-term)
- Foreign Tax Credit prevents double taxation, but timing matters
Working with Professionals
Given the complexity, we strongly recommend:
- A US CPA experienced in expat taxation
- A Spanish fiscal advisor (asesor fiscal)
- Coordination between both professionals
At ULI & LISA, we maintain a network of trusted tax professionals who specialize in US-Spain cross-border matters and can provide referrals.