When you prepare for property purchase, it is important to estimate the total amount of your payment. Besides the property cost you have to expect some additional taxes, which you have to pay both at the purchase and after becoming an owner. Let’s talk about taxes in one of the most popular country for foreign buyers.
The first thing we need to establish is the difference between ‘residents’ and ‘non-residents’, because these categories of buyers pay different taxes.
In the context of taxation, residents are considered to be those who meet at least one of these requirements:
Spend more than 183 days a year in Spain, not necessarily continuously.
Declare Spain as the center of their life interests, in other words, their family and business are there.
Buying Spanish property does not make you a Spanish resident. Most foreign owners remain under wing of their native tax system.
Please note! The information in this article is provided for informational purposes only and cannot be considered as legal advice. To calculate the tax burden in each specific case, we recommend contacting professionals.
Taxes When Buying Property in Spain
During purchasing everyone is equal. Locals and foreigners, residents and non-residents pay the same taxes. These taxes are paid immediately after the conclusion of a sale contract. You cannot register your transaction without paying state fees.
The tax rate depends on the type of your property/ Whether it’s residential or commercial, primary or secondary, the rate is different. Even location matters.
Secondary market Property transfer tax (Impuesto sobre Transmisiones Patrimoniales-ITP). Depends on the property location. The average around the country is 8%, but in Catalonia it’s 10%, while in the Canary Islands it’s 6.6%.
Primary market Value added tax, i.e. VAT (IVA, Impuesto sobre Valor Añadido). It’s the same in every region - 10%.
If you buy a land plot or commercial property, the VAT is 21%.
These are the most important taxes you are going to face. But there are also stamp duty, payment for making entries in the register of owners and notary expenses about 2-4% of the price. If you take out a mortgage, additional expenses increase by a couple of percent.
Please note! In Spain taxes are never included in the property that you see in ads for purchase and sale. Therefore, feel free to add about 13-15% to the price and you get the amount of your total expenses.
Taxes on the Maintenance of Real Estate in Spain
In addition to the cost of utilities expect for annual taxes, the amount of which will depend on the price of the property, it’s location, the quality of construction as well as on whether the property is rented or not.
Local authorities issue the main fee to all owners, including foreign ones. It’s called the IBI property tax (Impuesto sobre Bienes Inmuebles).
The tax is calculated from the cadastral value of real estate, which is always much lower than the market value. Each municipality determines the payment procedure independently.
Rates are different in all regions from 0.4% to 1.16%. The table below shows the average IBI property tax rates and the year of cadastral valuation in the Spanish provinces that are popular among foreigners.
Valencia
1998
1.07%
Girona
1990
0.88%
Alicante
1996
0.84%
Barcelona
2002
0.82%
Murcia
2002
0.79%
Malaga
2002
0.72%
Most owners of holiday homes and apartments in Spain receive an annual bill of €200-800. However, the IBI tax may be twice as high, if you buy luxury property in a premium location.
Properties in Spain
3 500 000 €
House in Marbella, Spain
391 sq.m33
Residence
The first branded residential project on the Costa del Sol, in which the DNA of an iconic brand in the fashion world joins forces in collaboration with a leading developer in the luxury housing market to create a truly unique project that achieves the highest standards of excellence. The complex has a rich infrastructure with a gym, swimming...
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Apartment in Marbella, Spain
22
Residence
The complex is ideally located in San Pedro, 5 km from Puerto Banus and 14 km from the center of Marbella. The project is located in the heart of San Pedro, offering residents easy access to a variety of amenities including an international school, supermarkets, boutiques, pharmacies, medical services, tennis courts, golf courses, restaurants...
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Flat in Barcelona, Spain
67 sq.m11
Residence
One of the most exclusive new complexes in Barcelona, with an unsurpassed location on one of the most iconic and luxurious avenues of the city.
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Flat in Barcelona, Spain
75 sq.m22
The new apartment complex is located in the new trendy district of Barcelona – Sant Marti, just 2 km from the beaches, close to parks, shops, cafes and restaurants.
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Hotel in Marbella, Spain
127 sq.m
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515 000 €
Shop in Barcelona, Spain
180 sq.m
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600 000 €
Villa in Alicante, Spain
260 sq.m53
Residence
The villa is located in Alicante in the gated community of Altea Hills.The villa has an area of 260 sq. m. The apartment includes 5 bedrooms, 3 bathrooms, 2 kitchens, two separate entrances.The plot has a swimming pool and a terrace with panoramic sea views.
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1 300 000 €
Shop in Barcelona, Spain
527 sq.m
The commercial premises are located in Barcelona on Diagonal Avenue.The room with an area of 527 sq. m. is divided into 3 floors. The room includes a large commercial facade.The premises have been leased to the restaurant since 2003. The rental amount is €5,600/month.
Profitability - 5.4%
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3 000 000 €
Shop in Barcelona, Spain
779 sq.m
The restaurant is located in the heart of Barcelona, in the Eixample district.The area of the premises is 779.23 sq. m. This area includes two rooms (each room with an area of about 400 sq. m.).One room is for sale with a restaurant, the second room is rented for a period of 10 years, the rental price is €7,000/month (including VAT).The...
NF Group
850 000 €
Shop in Barcelona, Spain
150 sq.m
The commercial premises are located in the heart of Barcelona, in an exclusive corner building on a semi-pedestrian street in the famous Gracia district.
In 2019, the room was completely renovated. At the moment, the premises are leased to a chain restaurant.
The room has a restaurant license (owner's property) and a smoke extractor.
Room...
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3 900 000 €
Shop in Barcelona, Spain
1887 sq.m
The commercial premises are located in the very center of Barcelona.At the moment, the room is leased to a fitness club. The contract term is 26 years, starting from April 14, 2000, until December 31, 2026. The rental amount is €197,000/year.The room includes two floors - the main floor with an area of 873 sq. m. m and ground floor with an area...
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1 900 000 €
Shop in Barcelona, Spain
275 sq.m
The room is located in the Eixample Izquierda area at the intersection with Av. Diagonal.The premises are leased for an Italian restaurant for a period of 8 years from June 2017. During the first two years, a mandatory performance agreement is in effect for the tenant. The rent is €72.000/year.The real estate tax and utility costs are paid by...
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550 000 €
Apartment in Benahavis, Spain
138 sq.m32
Residence
The apartments are located in a prestigious resort in Benaavis, in a quiet and secluded place with beautiful landscapes, while only a few minutes drive from such major cities of Andalusia as Puerto Banus, Marbella and San Pedro De Alcantara.
The apartment is located on the ground floor and includes a spacious living room with a dining area and a...
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Villa in Marbella, Spain
868 sq.m44
Residence
We present to your attention an unusual villa by the sea, located in Marbella, Marbella, along the stunning coast of Marbella Este. Located in a privileged location on the first line of the beach, this villa offers panoramic sea and garden views.The exclusive design of this exceptional villa was masterfully designed by a prestigious...
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849 000 €
Townhouse in Marbella, Spain
120 sq.m32
Residence
Completely renovated and designed by one of Marbella's leading interior design studios, this incredible townhouse offers something completely different on the market. High-quality materials were used throughout the house.The area of the house is about 120 m2, and the terrace is 30 m2. The ground floor has an open floor plan with a beautiful...
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Penthouse in Marbella, Spain
55
Residence
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775 000 €
Villa in Marbella, Spain
166 sq.m32
Residence
The house is ideal for golf lovers. It is located on a golf course and within walking distance of other prestigious courses. The urbanization is within walking distance of supermarkets, international schools, restaurants and other services. The house faces east and is located on two levels. On the ground floor there is an open-plan space...
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980 000 €
Flat in Barcelona, Spain
134 sq.m32
Residence
The apartment is in excellent condition in the Eixample Dreta area of Barcelona. The total area is 134 sq.m. The apartment has 3 bedrooms, 2 bathrooms, a spacious living room with a dining area, a modern kitchen, a balcony. Air conditioning, heating system, underfloor heating.
NF Group
520 000 €
Flat in Barcelona, Spain
118 sq.m42
Residence
Apartment in Gava Mar on the Costa Garraf. The total area is 118 sq.m.The apartment has 4 bedrooms, 2 bathrooms, a spacious living room with access to the terrace and a modern kitchen.The house has a large communal area with a swimming pool and a barbecue area.The apartment is for sale with a tenant, a contract until 2025.
NF Group
750 000 €
Flat in Barcelona, Spain
115 sq.m22
Residence
Fantastic apartment in the heart of Eixample. Near Paseo de Gracia and Paseo San Juan, an area known for its prestigious restaurants and part of the so-called "Golden Square" architectural treasures of the city. The apartment has been completely renovated to the highest quality standards and all the components have been thought out to the...
The next government fee in Spain is the IRNR income tax (Impuesto sobre la Renta de No Residentes). It depends on your status in Spain, as well as on how you dispose of real estate. It applies to non-residents only.
Property tax in Spain for non-residents, who do not rent out their property:
If you do not make any profit in Spain and use the property yourself, the tax base for you is 2% of the cadastral value, or 1.1% for properties with the assessment carried out after 1994.
The IRNR tax rate for residents of the European Union, Iceland and Norway is 19%, and for all others it’s 24%.
Property tax in Spain for foreigners, who rent out their property:
If you make a profit from your Spanish real estate, the income tax IRNR is calculated on the amount of the annual rent. The rates are the same: 19% for European citizens, 24% for all other foreigners.
Owners of luxury real estate in Spain also pay the annual wealth tax (Impuesto sobre el Patrimonio). It was entered in 2008, when the Spanish economy was going through a crisis. The debate about the need to cancel this tax is still on.
The tax is collected by local municipalities. The tax base depends on the region, but in most cases owners of properties less than €700 000 are freed from payment (€1 400 000 for married couples). Various encumbrances such as mortgages can be deducted from the tax base. The stakes are rising along with the price of from 0.2% to 2.5%.
Property owners in Spain have one more fee to pay, which is the municipal tax on garbage disposal. It’s collected by the local authorities and used to keep surrounding areas clean.
The size of this tax depends on the location of the property. Usually, you will receive a check for €100-200 per year.
Please note! It is a duty of the owner to pay all fees and taxes on time. The city authorities send a notification to the Spanish address after you officially registrate as the owner. If you lose this notification or do not notice it (or it does not reach, which also happens), and as a result, the money is not paid, you will be charged a penalty. You will not be able to sell or mortgage real estate until you pay it. In cases of large debts, property can be seized by a court order, but in practice it rarely happens.
To simplify the calculation you can set the automatic payments from your bank account in Spain. Many agencies also offer a real estate management service to foreign owners, which includes monitoring and paying all bills.
