Understanding Spanish Property Tax

Listen directly to what Alex Radford has to say about property tax in Spain in our exclusive video. 

Types of property tax in Spain

When you buy, own, or sell a property in Spain, you’ll come across several different taxes. These aren’t all due at once, but it’s important to understand how they fit together, because they can significantly affect your overall costs.

Broadly speaking, property taxes in Spain fall into three main categories:

• Taxes when purchasing a property – These are the biggest one-off costs you’ll face at the start of your journey, including Transfer Tax (on resale homes), VAT and Stamp Duty (on new builds), and associated notary and registry fees.
• Ongoing annual property taxes – Once you own a home, you’ll pay recurring charges like IBI (local council tax), non-resident income tax if you live abroad, and in some cases, Wealth Tax.
• Taxes when selling – If you sell, you may need to pay Capital Gains Tax on your profit, as well as Plusvalía, a local tax on land value increases.

For international buyers, it’s also essential to understand how these taxes apply differently to residents and non-residents. As legal expert Alex Radford puts it, Spanish property tax isn’t designed to catch you out — but you do need to know what’s expected.

Taxes when purchasing property in Spain

Buying a home in Spain isn’t just about agreeing a purchase price with the seller. On top of that price, you’ll also need to budget for purchase taxes, which can add anywhere from 7–12% to the overall cost of your property. These are some of the largest expenses you’ll face in the buying process, so understanding them early helps avoid any last-minute surprises.
 

Transfer Tax in Spain (Impuesto sobre Transmisiones Patrimoniales – ITP)

The taxes you’ll pay depend mainly on:
 

• Whether the property is a resale or a new build – resale properties are subject to Transfer Tax (Impuesto sobre Transmisiones Patrimoniales, or ITP), while new builds are subject to VAT (Impuesto sobre el Valor Añadido, or IVA) and Stamp Duty (Actos Jurídicos Documentados, or AJD).
• Where the property is located – Spain’s 17 autonomous regions each set their own rates for Transfer Tax and Stamp Duty, so the amount can vary significantly depending on whether you’re buying in Andalusia, the Balearics, or Barcelona.
• The value of the property – in some regions, higher-value properties fall into a higher Transfer Tax band, while Stamp Duty can also scale with purchase price.

As legal expert Alex Radford explains, these taxes are built into the purchase process:
 

“So when you buy a second-hand property, you’re going to pay transfer tax and that varies from region to region.”

Here’s a breakdown of some regional rates in 2025 (using Alex’s examples):
 

In practical terms, this means that two buyers paying the same purchase price in different regions could face very different tax bills. For example, a €200,000 resale apartment in Valencia would attract €20,000 in Transfer Tax (10%), while the same property in Andalusia would cost €14,000 in Transfer Tax (7%).

VAT (Impuesto sobre el Valor Añadido – IVA)

If you buy a brand-new property or one that’s still under construction (off-plan), you won’t pay Transfer Tax. Instead, you’ll pay Value Added Tax (IVA), which is charged by the developer and collected by the Spanish tax authorities.
For residential properties, VAT is generally 10% of the purchase price. This makes it one of the most significant costs when buying new.
Alex shares a practical example that illustrates how VAT is applied:

“If you’ve got to put a €6,000 deposit down, it’ll be €6,000 plus typically in Andalusia, 10% VAT on top of the purchase price. So you’ll be paying a deposit of €6,600.”
 

Important points:

• Residential new builds: 10% VAT.
• Plots of land or commercial property: 21% VAT.
• VAT is always paid on top of the agreed purchase price and is listed clearly in the contract.
• Unlike Transfer Tax, VAT is uniform across Spain and does not vary by region.
   

Stamp Duty (Actos Jurídicos Documentados – AJD)

In addition to VAT, buyers of new or off-plan properties must also pay Stamp Duty (AJD). While smaller than VAT, this tax still adds thousands of euros to the purchase costs and shouldn’t be overlooked.
Alex explains:
 

“Once you’ve completed the property purchase of an off-plan property, you’ll pay stamp duty and that ranges from region to region between 1 and 2%.”

Unlike VAT, Stamp Duty is set by each autonomous region. This means the percentage can vary depending on where your property is located.
 

Key things to know about Stamp Duty:

• Applies only to new builds/off-plan purchases.
• Paid when the purchase is completed and registered at the notary.
• Rate varies by region (typically between 1% and 2%).
• Calculated on the declared purchase price of the property.

Combined with VAT, the upfront tax burden on a new build is usually higher than on a resale property. That’s why many buyers weigh the total tax bill when deciding between a resale and a brand-new home.
 

Ongoing property taxes in Spain

Buying your dream home in Spain is only the beginning. Once the keys are in your hand, you’ll face a set of recurring property taxes that are charged annually. These apply whether you live in Spain full-time, use your property as a holiday home, or hold it as an investment. Fortunately, most of these charges are relatively modest compared to many other countries, but it’s important to plan for them in your budget.

Annual Real Estate Tax (IBI / Suma)

Spain’s equivalent of council tax is the Impuesto sobre Bienes Inmuebles (IBI), which is charged by local town halls. In the Valencian Community it’s called Suma, but the principle is the same: it’s a tax on property ownership.
 

IBI is calculated based on the property’s cadastral value, a government-assigned valuation used for tax purposes. This figure is usually lower than the market value of your home, which keeps the bill relatively affordable.
 

Alex notes the positive surprise many buyers feel:

“Depending on the area… in Andalusia, it’s called the IBI. Up in the Costa Blanca, the Valencian Community, it’s called Suma. Many Northern European clients and clients from the States and Canada will be very happily surprised at how cheap some of these town hall rates are compared to their home countries.”
 

What to expect:

• Bills are issued by the town hall, usually once a year. Some municipalities allow instalment payments.
• Typical costs range from €300–€800 per year for a property valued at around €200,000. Luxury villas or large plots will be higher.
• IBI covers local services such as waste collection, infrastructure maintenance, and municipal services.

Always check with the seller or estate agent what the current IBI bill is before you buy. This gives you a realistic idea of ongoing costs.
 

Non-Resident Income Tax (Impuesto sobre la Renta de No Residentes – IRNR)

If you own a property in Spain but don’t live there permanently, you’ll need to pay non-resident income tax (IRNR). This applies whether or not you rent out the property.

Alex highlights how modest this tax can be:

“If you’re a non-resident based on, say, a property of €200,000, the non-residence income tax could be like €200 or €300 a year. So it’s a negligible amount.”

Key points:

• Imputed income: Even if you don’t rent out your property, the government assumes you derive a small “benefit” from owning it and taxes you on an imputed rental value. This is calculated using the cadastral value of your home.
• If you do rent it out: You’ll instead be taxed on your actual rental income. EU residents can deduct certain expenses (like repairs or community fees), but non-EU residents typically cannot.
• Self-assessment: IRNR is not automatically billed. You must submit a self-assessment tax return, usually annually. Many owners appoint a gestor (tax advisor) to handle this.
   

For a €200,000 property that you don’t rent out, you might expect to pay around €200–€300 per year in IRNR. If you earn €10,000 in rental income, the tax would be applied at the relevant non-resident rate instead.
 

Wealth Tax (Impuesto sobre el Patrimonio)

Wealth Tax in Spain only affects higher-value properties or owners with significant assets. It’s a tax on your net worth, including property, savings, and investments, after deducting allowances and mortgages.
It mainly affects high-net-worth buyers with large property portfolios.
 

Thresholds vary by region:

• In most regions, the starting threshold is around €700,000 per person (plus an additional allowance for your main residence).
• Some regions set higher thresholds or offer reductions.
• Madrid currently applies a 100% relief, meaning no Wealth Tax is due there.
   

This tax mainly impacts high-net-worth buyers or those with multiple properties. For most everyday buyers, it will never apply.
If you’re considering a portfolio of Spanish properties or relocating with significant assets, it’s worth consulting a tax advisor to understand whether Wealth Tax might apply in your chosen region.

 

Taxes when selling property in Spain

When you eventually sell your property, two taxes may apply:

Capital Gains Tax (CGT)

Capital Gains Tax applies on the profit made between your purchase price and your sale price (minus certain allowable costs like notary fees or renovations).

Rates for 2025 are progressive:

• 19% on the first €6,000 gain
• 21% up to €50,000
• 23% up to €200,000
• 26% up to €300,000
• 28% above €300,000

You can learn more about capital gains tax in Spain in our complete guide to capital gains tax in Spain.

Plusvalía Tax (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana)

Plusvalía is a municipal tax charged on the increase in the value of the land your property sits on since it was last sold. It’s calculated and collected by the local town hall, and is separate from Capital Gains Tax.

A 2022 reform changed the way this tax is calculated. Sellers now have two options:

• Based on cadastral coefficients (a set formula applied to the land’s official value).
• Based on the actual market increase in value since the last transfer.

The idea is to make the tax fairer, especially in cases where property values have not risen significantly.
 

Key points:

• The seller usually pays this tax, though in some contracts the parties may agree otherwise.
• Exemptions exist if you sell the property at a loss, meaning you won’t be taxed on a negative return.
• Each town hall sets its own rates, so amounts can vary depending on location.
   

For example, on a home you’ve owned for 15 years in a growing coastal town, Plusvalía could add several thousand euros to your selling costs. Whereas, in a stagnant market with little land value increase, the amount may be much lower, or even exempt.

Property tax in Spain for foreigners

For non-Spanish residents, property taxes often raise the most questions — especially for those buying a second home, planning a retirement move, or splitting their time between countries. The key point to remember is that owning a property in Spain always carries tax obligations, no matter how often you use it.

The essentials for foreign owners:

• You are always liable for annual IBI/Suma (local council tax) and IRNR (as well as non-resident income tax) if you own property in Spain, even if you don’t live in Spain full-time.
• Failing to pay these taxes can result in penalties, surcharges, or complications when you eventually sell your property, as unpaid tax debts are recorded against the property.
• Residency status determines whether you pay IRNR (non-residents) or declare the property under your Spanish income tax return (residents).
   

A common misunderstanding is that holiday homeowners can skip these payments because the property is only used occasionally. In fact, Spain’s tax system assumes a notional benefit from ownership and taxes accordingly.

For example, If a UK resident buys a €250,000 holiday home in Alicante but only uses it six weeks a year, they must still pay IBI (to the local town hall) and IRNR (to the tax office). These are not optional, and keeping them up to date makes later processes, like selling or applying for residency, much smoother.

Practical advice for foreigners:

• Appointing a local gestor or lawyer can help ensure you never miss a filing deadline.
• Keep records of your tax payments, as they will be checked when you come to sell.
• Remember that if you decide to rent out your property, the tax rules change and you must declare actual rental income instead of the imputed value.

For most international owners, these taxes are modest compared to their home country, but staying compliant avoids unnecessary stress and secures your long-term investment.
 

Knowing how to pay property taxes

Spanish property taxes are usually paid in one of three ways:

• Town hall: IBI/Suma is billed locally, often payable in instalments.
• Self-assessment: IRNR and CGT are declared via the Agencia Tributaria (Spanish Tax Agency).
• Gestor or lawyer: Many foreigners appoint a professional to handle filings, which reduces the risk of mistakes or late fees.

For more information about how to pay your property taxes, check out Agencia Tributaria, the Spanish Tax Agency. 

Owning a second home in Spain

Spain is one of Europe’s most popular destinations for second homes, with thousands of international buyers choosing a holiday apartment by the beach or a villa in the countryside. If you own a second home here, you’ll face a few recurring tax obligations — but the good news is that, compared to many other countries, these costs are usually modest.

The main obligations are:

• Annual IBI or Suma: Paid to your local town hall, this is Spain’s equivalent of council tax. It helps fund community services like rubbish collection, local roads, and amenities. The amount is based on the cadastral value of your property, which is often lower than market value.
• Non-resident income tax (IRNR): Even if you only use your Spanish home for holidays, you must file a return each year. The Spanish tax office assumes a small imputed rental income and taxes you on it. If you rent the property out, you’ll instead be taxed on actual rental earnings.
• Wealth Tax: This only applies to high-value assets. Most regions set the threshold around €700,000 per person (excluding allowances), but some regions like Madrid apply full relief, while others may lower or raise thresholds.

For example, a British couple with a €250,000 apartment in Alicante can expect to pay annual IBI of around €400 and IRNR of €250–€300. Unless they own significant other assets, Wealth Tax will not apply.

Other points to consider as a second-home owner:

• Utilities and community fees: While not taxes, these are regular costs you’ll need to pay alongside IBI and IRNR.
• Insurance: Many second-home owners choose additional home insurance to protect against risks while the property is empty.
• Compliance: Non-payment of IBI or IRNR can create problems if you later want to sell. Debts are attached to the property, not just the owner.

While this may sound like a long list, many international buyers are pleasantly surprised. As Alex Radford notes elsewhere, Spanish local taxes are often much cheaper than in Northern Europe or North America, making the cost of running a second home in Spain relatively affordable.

The cost of moving to Spain

Property taxes are only one part of the equation when budgeting for your move. Buyers should also plan for a range of additional costs that come with settling into a new home:

• Legal fees: Most buyers hire a lawyer (abogado) to check contracts and manage the purchase, typically costing 1–2% of the property price.
• Notary and land registry fees: Required to formalise the sale and register ownership — usually 1–1.5% of the purchase price.
• Gestor fees: If you use a gestor or tax advisor, budget for their services in filing annual returns and handling paperwork.
• Moving and setup costs: From shipping furniture to installing internet, expect a few thousand euros depending on your circumstances.
• Utilities and community fees: Ongoing charges for water, electricity, and shared services in apartment complexes.

Together with property taxes, these costs give you the true picture of affordability when buying in Spain. The key is to plan ahead so you’re never caught by surprise. We go into more detail about the Spanish tax system in our comprehensive guide.

Property tax in Spain covers everything from upfront purchase costs to modest annual charges and selling taxes. While the details vary between regions, understanding the basics means you can budget effectively and avoid surprises.

As Alex Radford explains about non-resident income tax:

“It’s a tax that you’re obliged to pay, but it’s self-assessment, you submit it yourself.”

With professional guidance from a lawyer or gestor, paying property tax in Spain is straightforward — and shouldn’t get in the way of your property dreams.