How Much Are Property Taxes in Spain?

Property ownership in Spain involves a structured system of taxation impacting buyers, current owners, and sellers. Various taxes apply at different stages, from the initial purchase to annual ownership obligations and eventual sale. Assessing these financial commitments from the outset provides a clearer picture of the total investment required.

Taxes on Property Acquisition

Acquiring property in Spain involves specific taxes depending on whether it is a new build or a resale. Buyers should account for these upfront expenses when budgeting for a property.

When purchasing a resale property, the primary tax is the Impuesto de Transmisiones Patrimoniales (ITP), or Property Transfer Tax. The taxable base for ITP is the higher of the declared purchase price or the cadastral reference value assigned by the regional tax authority. Rates for ITP are determined by Spain’s autonomous communities and vary significantly, generally ranging from 6% to 13%. For example, in some regions, a flat rate of 7% may apply, while others might have progressive rates. For a property with a reference value of €260,000 in a region with an 8% ITP rate, the tax would be €20,800.

For new-build properties purchased directly from a developer, two main taxes apply: Impuesto sobre el Valor Añadido (IVA), or Value Added Tax, and Actos Jurídicos Documentados (AJD), or Stamp Duty. The standard IVA rate on new residential property sales is 10% of the purchase price. For instance, a new build valued at €300,000 would incur €30,000 in IVA. Stamp Duty (AJD) is an additional tax levied on the legal documentation of the sale, with rates ranging from 0.5% to 1.5% depending on the autonomous community. In Andalusia, the AJD rate is 1.2%.

Buyers should also be aware of the Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana (IIVTNU), or Municipal Capital Gains Tax (Plusvalía Municipal). This tax is typically paid by the seller and affects their net proceeds.

Annual Property Ownership Taxes

Ongoing property ownership in Spain entails several recurring taxes paid to local and national authorities.

The Impuesto sobre Bienes Inmuebles (IBI), or Municipal Property Tax, is an annual local tax paid to the municipal council. This tax is calculated based on the official cadastral value (valor catastral) of the property. The cadastral value is an administrative value assigned by local authorities, generally lower than the market value, often by 30-40%. IBI rates are set by each municipality and range from 0.4% to 1.1%, though they can go up to 1.3% of the cadastral value. For example, a property with a cadastral value of €100,000 in a municipality with a 1% IBI rate would incur an annual tax of €1,000.

Non-residents owning property in Spain are subject to the Impuesto sobre la Renta de No Residentes (IRNR), or Non-Resident Income Tax. This annual tax applies whether the property is rented out or used for personal purposes. If the property is not rented, a theoretical or “imputed” rental income is calculated based on the cadastral value. The taxable base for this imputed income is 1.1% or 2% of the cadastral value, depending on when the value was last revised. The tax rate applied to this imputed income is 19% for residents of the European Union (EU) or European Economic Area (EEA), and 24% for non-EU/EEA residents. For a non-EU resident with a property having a cadastral value of €100,000 and a 1.1% imputed percentage, the taxable base would be €1,100, resulting in a tax of €264.

If the property is rented out, the IRNR is applied to the actual rental income generated. For EU/EEA residents, certain expenses related to the rental activity, such as community fees, repair costs, and utility fees, can be deducted before calculating the taxable income. The tax rate on actual rental income is 19% for EU/EEA residents and 24% for non-EU/EEA residents. Since 2024, non-residents who rent out their property must file an annual rental income tax return, with the deadline for income earned in 2024 being between January 1 and January 20, 2025.

The Impuesto sobre el Patrimonio (IP), or Wealth Tax, is an annual tax on net assets, including property, that exceed a certain exemption threshold. For non-residents, this tax applies to assets located in Spain. The national exemption threshold for wealth tax is €700,000 per individual.

This tax is highly regionalized, meaning that autonomous communities can set their own thresholds and progressive rates. National rates range from 0.2% to 3.5%, but some regions, like Catalonia, can have rates up to 3.75%. Conversely, some autonomous communities, such as Madrid and Andalusia, offer 100% relief from this tax. For residents, there is an additional exemption of up to €300,000 for their primary residence.

Taxes on Property Sale

Selling property in Spain incurs specific taxes on the profit generated from the sale and on the increase in the land’s value. Both residents and non-residents are subject to these obligations.

The primary tax on the sale of property is the Impuesto sobre Ganancias Patrimoniales, or Capital Gains Tax. This tax is levied on the profit, which is calculated as the selling price minus the acquisition price. The acquisition price can be adjusted for certain costs, such as transfer tax or VAT paid during the purchase, and documented improvement costs. For Spanish tax residents, capital gains are subject to progressive tax rates, starting at 19% for the first €6,000 of profit, then increasing to 21% for profits between €6,000 and €50,000, 23% for profits between €50,000 and €200,000, and 26% for profits exceeding €200,000.

For non-residents, the Capital Gains Tax rate is generally a flat 19% for EU/EEA residents and 24% for non-EU/EEA residents. When a non-resident sells a property, the buyer is required to withhold 3% of the sale price and pay it directly to the tax authorities as an advance payment toward the seller’s capital gains tax liability. If the 3% withheld amount exceeds the final tax due, the seller can claim a refund.

There are specific exemptions and reductions that can impact the amount of Capital Gains Tax owed. Spanish residents who sell their primary residence may be exempt from this tax if they reinvest the entire proceeds into a new primary residence within two years of the sale. This new residence must be located within Spain or another EU/EEA country. Residents aged 65 or older are exempt from capital gains tax when selling their primary residence, provided they have lived there as a tax resident for at least three years, regardless of reinvestment. An exemption also exists for individuals over 65 who reinvest the proceeds from any property sale into a life annuity, with a maximum exempt amount of €240,000.

The Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana (IIVTNU), or Municipal Capital Gains Tax (Plusvalía Municipal), is also paid by the seller. This tax is calculated by the local municipality based on the increase in the cadastral land value of the property over the period of ownership. The calculation involves applying coefficients to the cadastral value of the land, which vary based on the number of years the property has been owned. The municipal tax rate, with a maximum of 30%, is then applied to this calculated base. The seller can choose between an objective calculation method or a method based on the actual capital gain on the land, selecting whichever results in a lower tax liability.