Property Tax in Spain — What Foreign Buyers Must Know

Buying property in Spain is an exciting opportunity for foreign investors. The sun, the lifestyle, and the growing property market make it attractive. But before you sign on the dotted line, understanding property tax in Spain is essential.

Many foreign buyers focus on property prices and forget about ongoing tax obligations. This mistake can lead to unexpected costs and legal issues. Property taxes in Spain vary based on location, property type, and your residency status. Whether you plan to live in Spain full-time or own a holiday home, knowing your tax responsibilities will save you time and money.

This guide breaks down everything you need to know about property tax in Spain, from annual payments to one-time fees when buying or selling.

Are There Property Taxes in Spain?

Yes. Spain has several property taxes that apply to both residents and non-residents. These include annual taxes, purchase taxes, and taxes when selling a property.

The Spanish Tax Agency (Agencia Tributaria – AEAT) manages national taxes, while local councils (Ayuntamientos) handle municipal taxes. Each region sets its own rates, so property tax costs in Spain can vary widely.

Foreign buyers should understand these differences, as your tax obligations depend on whether you live in Spain, rent out the property, or leave it unused.

Key Entities and Legal Framework

Three main bodies control property taxation in Spain:

• Spanish Tax Agency (AEAT): Oversees income tax and non-resident tax.
• Local Councils (Ayuntamientos): Collect annual municipal taxes such as IBI.
• Regional Governments: Set rates for transfer tax, wealth tax, and certain exemptions.

Each region has autonomy over certain taxes. For example, Madrid offers full wealth tax exemptions, while other regions do not.

Types of Property Taxes in Spain

1. IBI Tax (Impuesto sobre Bienes Inmuebles)

IBI is a yearly municipal tax paid by all property owners. It is based on the cadastral value, which is different from the market value. Cadastral values are typically lower, but they influence many Spanish taxes.

What affects IBI?

• Location
• Size of property
• Cadastral value updates
• Use of the property

How much are property taxes in Spain through IBI?

Most areas charge 0.4 percent to 1.3 percent of the cadastral value. A property with a cadastral value of €150,000 may have an annual IBI of €600 to €1,200 depending on the region. You can check your cadastral value on the Spanish Cadastre website.

2. Non-Resident Property Tax in Spain (IRNR)

If you live outside Spain for more than 183 days per year, you are considered a non-resident. You must pay Non-Resident Property Tax in Spain, even if the property is not rented.

Non-rented properties

• A percentage is applied to the cadastral value.
• Rates vary, but EU citizens pay lower percentages than non-EU citizens.

Rented properties

• Tax is charged on rental income.
• EU residents can deduct some expenses.
• Non-EU residents cannot deduct costs.

How much is non-resident property tax in Spain?

For a property with a cadastral value of €150,000:

• Deemed income: €150,000 x 1.1% = €1,650
• Tax for EU residents: €1,650 x 19% = €313.50 per year

This is mandatory. You must file Form 210 annually with the AEAT, even if the property sits empty. The OECD provides detailed information on international property tax structures for comparison.

3. Wealth Tax (Impuesto sobre el Patrimonio)

Wealth tax applies to individuals with assets above a set threshold. For non-residents, only assets located in Spain are taxed.

Regions set their own exemptions, with the general allowance at €700,000, though places like Madrid offer full exemptions.

If your Spanish property exceeds the limit, you pay wealth tax on a 0.2%–3.5% sliding scale, which can create substantial annual costs for high-value properties in regions without exemptions.

Foreign buyers with luxury properties should factor this into their budget. Spain's wealth tax regulations vary significantly by region.

4. Capital Gains Tax When Selling Property in Spain

When selling property in Spain, you pay capital gains tax on the profit. The rate depends on your residency status.

For residents:

• Capital gains are taxed at 19% to 28%, depending on the profit amount.

For non-residents:

• The flat rate is 19% for EU residents and 24% for non-EU residents.
• The taxable gain is the sale price minus the purchase price and allowable expenses.
• Allowable expenses include notary fees, registration costs, and property improvements.

Selling property in Spain tax implications for non-residents:

Spain withholds 3% of the sale price at the time of sale. The buyer pays this directly to the tax authority. If your actual capital gains tax is lower than the 3% withheld, you can claim a refund by filing Form 210.

5. Property Transfer Tax (ITP)

When buying property in Spain (resale properties), you pay Property Transfer Tax. This is called Impuesto sobre Transmisiones Patrimoniales (ITP).

Rates vary by region, typically between 6% and 10% of the purchase price. For example:

• Andalusia: 7% (reduced to 3.5% for properties under €130,000)
• Madrid: 6%
• Catalonia: 10%

This is a one-time payment due within 30 days of the purchase. You can find detailed regional rates on the Spanish government's official portal.

6. VAT and Stamp Duty on New Builds

For new-build properties in Spain, buyers pay VAT (IVA) instead of ITP. The VAT rate is 10% of the purchase price. You also pay Stamp Duty (AJD), which varies by region, usually 0.5% to 1.5%.

Example (Purchase Price: €200,000):

• VAT (10%): €20,000
• Stamp Duty (1.5%): €3,000
• Total upfront taxes: €23,000

7. Plusvalía Municipal (Local Capital Gains Tax)

Plusvalía is a local tax charged when selling a property. It taxes the increase in the land’s value during your ownership. The council calculates it using the cadastral value and the number of years you’ve owned the property, and rates differ by municipality.

Both the seller and buyer can be liable, depending on the sales contract. Clarify this with your lawyer before closing. The European Commission offers guidance on property taxation across EU countries.

Property Tax in Spain for Foreigners

Foreign buyers face different filing rules but pay the same tax percentages as residents.

Foreign buyers should note:

• You must file annual property taxes in Spain even if the home is empty.
• Non-resident tax in Spain on property is mandatory unless you become a tax resident.
• You may need Forms 210, 720, or 714 depending on your situation.
• Missing deadlines can lead to fines and interest charges.

Common mistakes foreign buyers make

• Assuming tax rates are the same nationwide
• Miscalculating cadastral values
• Forgetting non-resident annual declarations
• Not budgeting for IBI and IRNR
• Ignoring tax on rental income

How Much Are Property Taxes in Spain? (Realistic Cost Examples)

Understanding property tax costs in Spain helps you budget accurately. Here are realistic annual cost examples:

€150,000 apartment in a coastal town:

• IBI: €450
• Non-resident tax (if empty): €315
• Total annual taxes: €765

€300,000 villa in Andalusia:

• IBI: €900
• Non-resident tax (if empty): €630
• Total annual taxes: €1,530

€1,000,000 luxury property in Marbella:

• IBI: €3,000
• Non-resident tax (if empty): €2,100
• Wealth tax (if applicable): €2,500
• Total annual taxes: €7,600

These figures exclude taxes on rental income or capital gains. They also do not include utility bills or community fees.

For guidance on choosing the right location to minimise costs and maximise value, check out our guide on the best places in Spain to buy property.

How to Pay Taxes in Spain: Step-by-Step Guide

1. Pay IBI to your local council

• Visit the council office or pay online
• Set up direct debit to avoid missing deadlines
• Keep receipts for future tax filings

2. File Non-Resident Property Tax (IRNR)

• Use Form 210
• Submit online via the AEAT website or through a tax representative
• Pay electronically or through your Spanish bank

3. Paying Wealth Tax

• Submit the corresponding form (Model 714)
• Required only for high-value assets

4. Avoid penalties

• Late payments can lead to penalties and interest.
• Using a local tax representative helps keep filings on time.

Buying Property in Spain Taxes: What You'll Pay Upfront

1. Taxes When Buying a New Build

For new construction, expect to pay:

• VAT (10%)
• Stamp Duty (0.5% to 1.5%)

2. Taxes for Resale Properties

For second-hand properties, you pay:

• Property Transfer Tax (6% to 10%)

3. Legal Costs & Additional Fees

Beyond taxes, budget for:

• Notary fees: €600 to €1,200
• Land Registry fees: €400 to €600
• Lawyer fees: 1% of purchase price
• Surveyor fees: €300 to €500
• Mortgage setup fees: 1% to 2% of loan amount (if applicable)

These costs add up quickly. Plan for 10% to 15% of the purchase price in total upfront costs. Rightmove Spain offers calculators to estimate total buying costs.

Mortgage Considerations for Foreign Buyers in Spain

1. How Mortgage Taxes Work in Spain

When taking out a mortgage, you pay Stamp Duty on the loan amount. This ranges from 0.5% to 1.5%.

2. Non-Resident Mortgage Rules

Banks require non-residents to provide a larger deposit, usually 20% to 30% of the property price. Interest rates are also higher for non-residents compared to residents.

3. Compare Mortgage Rates and Home Loans

Lenders review your income, credit history, and property value. They also consider property tax costs in Spain when calculating your total ownership expenses. MoneySuperMarket offers comparison tools for international mortgage rates.

Get the Right Guidance Before You Buy in Spain

Understanding Property Tax in Spain helps you plan your investment with confidence. Foreign buyers face specific obligations, and tax costs vary across regions. With the right support, you can avoid penalties, reduce costs, and make informed decisions.

If you need help with mortgages, tax questions, or buying property in Spain, contact Tharros Brokers for expert assistance tailored to your needs.

FAQs About Property Tax in Spain