Introduction
Are you buying, owning, or selling a property? Understanding all the property taxes in Spain is very important. Whether you’re a resident or a non-resident can affect how much you pay.
We’ll simplify all the tax details so you are prepared. As a real estate agency in Costa del Sol, Spain for many years, we have a good understanding of the taxes associated with property transactions. We’ll share everything with you here, making the tax aspect of buying or selling a property in Spain clear and simple.
Quick Tip: Consulting a lawyer is recommended for a smooth legal process.
What Is The Average Property Tax In Spain?
New Developments
When purchasing a new development/off-plan property in Spain, be prepared to pay an additional 11.8% to 13.4% on top of the purchase price to cover all the necessary fees and taxes. (Including 1.21% for a laywer)
Resale Properties
When buying a resale property in Spain from another owner, you should expect to pay an additional 7.4% to 11.9% on top of the property’s price to cover all the necessary fees and taxes. (Including 1.21% for a laywer)
Now, let’s go into detail on all the taxes, so you can be prepared.
Property Purchase Taxes & Fees
1. Value Added Tax (VAT) - 10%
You’re required to pay VAT (10%) only when you buy a new property directly from a developer or off-plan.
Example: If you buy a new development priced at €200.000, the VAT would be an additional €20.000.
2. Transfer Tax (ITP) - 6% - 10%
You’re required to pay the Transfer Tax (ITP) only when you purchase a “resale” property from a previous owner. The rate varies from 6% to 10%, depending on the region.
Example: If you buy a resale property for €200.000 in a region with an 8% tax rate, you will pay €16.000 in Transfer Tax.
3. Stamp Duty (AJD) - 0,5% - 1,5%
You’re required to pay the Stamp Duty (AJD) only when you buy a new property directly from a developer or off-plan.
This tax is for the paperwork that makes your ownership of the property official. It ranges from 0,5% to 1,5%, depending on the region.
For resales, stamp duty is generally not applied to the property transfer itself but would be applied to a mortgage deed if you are taking out a mortgage.
Example: If you buy a new development priced at €200.000, the Stamp Duty Tax would be between €1.000 and €3.000.
Below, we’ve provided the exact percentages for each region:
- Andalusia – 1,2%
- Aragón – 1,5%
- Asturias – 1,2%
- Balearic Islands – 1,2%
- Community of Valenciana – 1,5%
- Canary Islands – 0,75%
- Cantabria – 1,5%
- Castile-La Mancha – 1,5%
- Castile-León – 1,5%
- Catalonia – 1,5%
- Ceuta – 0,5%
- Extremadura – 1,5%
- Galicia – 1,5%
- La Rioja – 1%
- Community of Madrid – 0,75%
- Melilla – 0,5%
- Murcia – 1,5%
- Navarra – 0,5%
- Basque Country – 0%
4. Notary Fee - 0,1% - 0,4%
When buying property, you pay a notary (a legal expert) to review your documents. Notary fees are 0,1%-0,4% of the property’s price.
For most apartments, this is a few hundred euros. The fee goes up with the property’s value but the percentage rate gets better for more expensive properties.
5. Land Registry Fee
When buying a property, you must pay the Land Registry fee to officially register it under your name.
Generally, this fee is about 50-70% of the notary fee.
For a typical apartment, you might pay a few hundred euros to get all the paperwork done.
6. Legal Fee (Lawyer) - 1% + VAT
If you’re buying property in Spain, consider hiring a lawyer. It’s optional but useful, especially if you’re not from Spain.
- They check documents, debts, legal papers and more.
- They can also help with opening a bank account and getting an N.I.E. (Foreigner Identity Number).
The cost is usually 1% of the property price + 21% VAT.
Example: For a €500.000 property, lawyer’s fees would be €5.000 plus €1.050 VAT, totaling €6.050.
7. Banking Fees
When you buy a property, you will usually pay with a bank check at a notary, and the bank will charge you for this check. Different banks charge very different amounts.
Also, many banks might charge you up to €150 every year as a fee for having an account. The fees are not big, but they are important to remember.
8. Mortgage Fees (If Applicable) - 1,5% - 3,5%
When you get a mortgage in Spain to buy property, there are a few extra costs, known as mortgage fees:
- Opening Fee: The bank charges this fee for setting up the mortgage. It’s usually 1-2% of the mortgage amount.
- Bank Appraisal Fee: The bank checks the property’s value before giving you the loan. An expert will do this, and it costs €250 to €600.
- Stamp Duty (AJD) on Mortgages: Just like with new developments or off-plan properties, for the mortgage’s legal papers, you pay a tax called stamp duty, which is 0,5% – 1,5% of the mortgage amount.
Overall, for a mortgage, you might pay 1,5% – 3,5% extra in fees.
Example: For a €500.000 mortgage, the fees could be €7.500 – €17.500.
9. Technical Inspection (If Applicable)
When you buy a property in Spain, you might want to have a technical inspection to check for hidden problems. This costs from a few hundred to a few thousand euros, depending on the property’s size and complexity.
Buyers often check for clear problems themselves. Thankfully, the seller must legally inform buyers of any major issues and there’s a six-month warranty for that. If the seller hides major problems, like too much humidity that makes the property hard to live in, the buyer can cancel the deal or ask for a lower price.
Property Ownership Taxes
1. Real Estate Tax (IBI) - 0,4% - 1,1% Per Year
The IBI tax is a yearly tax in Spain based on your property’s “cadastral value” – an official value looking at the location, size, use, and condition of your property, very often much lower than the market price.
Local councils set the tax rate, ranging from 0,4% to 1,1% of the cadastral value.
Example:
- Your property’s market price is €500.000.
- The cadastral value is €50.000.
- The local IBI tax rate is 0,7%.
You pay 0,7% on the €50.000, not the market price, making your IBI tax €350 for the year.
You can find out the cadastral value on your tax bill or by asking the local tax office.
2. Personal Income Tax/Non-Resident Income Tax
In Spain, if you own property and earn rental income, you must pay tax on that income every three months.
For Non-Residents:
- From within the EU/EEA: The tax rate is 19% on rental income.
- From outside the EU/EEA: The tax rate is 24% on rental income.
Imputed Income Tax
In Spain, there’s a tax called imputed income tax for property owners who don’t rent out their property. It’s like paying for the benefit of having your own place to stay in Spain, like a holiday home.
You pay this tax every year based on your property’s cadastral value, which is the property’s value according to the government records (based on location, size, use etc.). If this value hasn’t been updated in over 10 years, your tax rate is 2%. If the value is updated and less than 10 years old, the rate is lower at 1,1%.
Let’s break down the taxes for a non-resident from the EU/EEA who rents out their property in Spain most of the year, earning €20.000, and doesn’t rent it for 65 days:
1. Rental Income Tax:
- The tax rate on your rental income is 19%.
- On €20.000, you would pay €3.800 in tax.
2. Imputed Income Tax (for the 65 days when not rented):
- Your property’s cadastral value is €100.000.
- The tax rate is 2% because the value hasn’t been updated in more than 10 years, making it €2.000.
- You pay the 19% tax on this €2.000, which is €380.
- You only pay for the days it’s not rented. First, divide €380 by 365 days to get the daily tax rate (around €1,04).
- For the 65 days not rented, you multiply €1,04 by 65, which gives you about €67,60 for the imputed income tax for those days. €67,60 is the total you will pay for the year.
As you can see, the imputed tax is generally very low.
3. Solidarity Tax & Wealth Tax
If you own property or have other valuable assets in Spain, you should know about these two taxes: Wealth Tax and Solidarity Tax. Here’s a simple explanation:
Wealth Tax
The Wealth Tax in Spain is a yearly tax based on the value of assets owned on December 31st. Spanish residents pay this on all their assets worldwide. Non-residents only pay on assets located in Spain.
Tax Rates
Note that these numbers are rounded for simplicity.
€167.000 – €334.000 = 0,3%
€334.000 – €668.000 = 0,5%
€668.000 – €1.337.000 = 0,9%
€1.337.000 – €2.674.000 = 1,3%
€2.674.000 – €5.348.000 = 1,7%
€5.348.000 – €10.696.000 = 2,1%
€10.696.000 and above = 3,5%
Example: You’re a non-resident but you bought a property in Spain for €1.5 million. Spain lets you not pay tax on the first €700,000. So, you only pay tax on €800,000. If the tax rate is 0.9%, your Wealth Tax would be €7,200 every year.
Exceptions
Regions can change their Wealth Tax rates. Madrid and Andalusia have completely removed Wealth Tax.
Solidarity Tax
The Solidarity Tax is a temporary, yearly tax for people with more than €3 million in assets as of December 31st every year. It was created to support the Wealth Tax, mainly in regions where that tax has been lowered or removed. The rates of this tax can’t be changed by the regions. Spanish residents pay this tax on all their assets worldwide. Non-residents only pay it on assets located in Spain.
Tax Rates
- €3 million to €5.35 million = tax rate of 1.7%.
- €5.35 million to €10.7 million = tax rate of 2.1%.
- €10.7 million and above = tax rate of 3.5%.
Allowances/Deductions
Both the Wealth Tax and the Solidarity Tax give you a break on the first €700,000 of your assets – this is the same whether you are a Spanish resident or not. If you have your main residence in Spain, you can get another €300,000 tax break. But if the property you bought in Spain is for example a second home or an investment. You will only get the €700,000 tax break.
How Wealth Tax & Solidarity Tax Work Together:
- No Double Tax: You won’t have to pay both taxes. If you’ve paid the Wealth Tax, that amount gets deducted from the Solidarity Tax.
In summary, the Wealth Tax is a more fixed way of taxing, while the Solidarity Tax is a new, short-term one. It’s there to make sure there’s always some tax being paid on large amounts of wealth, especially where the Wealth Tax was lowered or removed.
Tip: If you buy a property with your wife or husband in for example Andalucia, the asset is split between you. That means, that even if you buy a property worth €5 million, you won’t have to pay any Wealth or Solidarity Tax, because each of you owns half of it. The tax is calculated per individual.
4. Gestor Fees
A gestor in Spain is someone who can help you with paperwork and understands legal stuff, a mix of an accountant and an office helper. You pay them based on what services you use. It’s up to you if you want to hire one, many non-residents don’t.
5. Community Fees
When you own property in a community with shared spaces like a residential area or a building in Spain, you have to pay community fees every 1 or 3 months. These are regular payments for shared places like gardens, pools, elevators, and for keeping the community safe. They can also help fix the buildings and pay for shared utilities, such as water or gas.
How much you pay changes based on what shared facilities you have. If you don’t pay these fees, you could face legal problems and might not be allowed to use things like the swimming pool.
Remember, when you buy a property in Spain, you need to think about community fees as they are part of the ongoing costs you will have. Most of the time, these fees are between €100 and €500, but sometimes they can be more, in luxury communities.
6. Garbage Tax
Every year, property owners in Spain need to pay a garbage tax. The cost is different for each location and is often part of your local council tax bill, which is called “Impuesto sobre Bienes Inmuebles” or IBI for short, which was mentioned above. The money from this tax is used for picking up home trash, keeping streets clean, and looking after places where trash is thrown away. It is usually. Generally, it’s €50 to €400 yearly.
Property Sale Taxes
1. Capital Gains Tax
When you sell a property in Spain, there’s a tax on the money you make called the Capital Gains Tax. It’s the difference between what you sold it for and what you bought it for. If you are a Spanish resident, the tax is between 19% and 23%, depending on the profit amount. If you are a non-resident, but you are from another EU/EEA country, you pay a fixed 19%. If you’re from somewhere else, like the USA, the rate is 24%.
If you’ve been living in the property for more than 3 years, you might be able to pay less on the tax. Also, if you’ve improved the property (for example did a renovation), you can add those costs to your original price, which can lower the profit you’re taxed on.
Here’s an example:
- You bought a property for €200.000 and sold it for €250.000.
- Your profit is €50.000.
- If you are a Spanish resident, you will pay between €9.500 to €11.500.
- If you are a non-resident, but you are from EU/EEA you’ll pay €9.500.
2. Municipal Plusvalia Tax
The Municipal Plusvalia Tax was a tax in Spain that sellers had to pay when they sold their property. It was based on how much the land value increased while they owned it. However, this tax was removed on October 26, 2021, so sellers don’t have to pay it anymore.
3. Bonus: Retention Tax
When a non-resident sells their property in Spain, there’s a special step to keep in mind. The Spanish law requires the buyer to hold back, or “withhold,” 3% of the sale price. This isn’t an extra cost but more like a security deposit paid to the Spanish tax office. Here’s how it works:
- Imagine you’re a non-resident and decide to sell your property in Spain.
- The person buying your property takes 3% of the purchase price and sends it to the government.
- This helps make sure that non-residents pay any remaining taxes they might owe to Spain. After all, once you leave the country, it could be harder for Spain to collect those taxes.
- If it turns out you’ve paid all your taxes and don’t owe anything, you can request this money back, usually within months but up to a year.
So, this isn’t an extra fee but rather a way for the tax office to make sure all your debts are paid.
Frequently Asked Questions
What is the average property tax in Spain?
For new developments, you will pay about 12% to 13,5% extra for taxes and fees, including a 1,2% lawyer fee. For properties sold by a previous owner, the taxes and fees are about 7,4% to 12%.
Do I have to pay tax if I own a property in Spain?
Yes, you must pay property tax every year. It’s called IBI and is between 0,4% and 1,1% of the property’s cadastral value, which you can find out from your local council.
What are the property taxes for foreigners in Spain?
Foreigners pay the same property taxes as Spanish residents. This includes the IBI tax, which is 0,4% to 1,1% of the property’s cadastral value each year. Non-residents also pay 19% to 24% rental income tax and the same range on capital gains tax, when they sell the property.
Who pays property tax in Spain?
In Spain, the property owner at the time of the tax assessment is the one responsible for paying the property tax.
What is the 3% property tax in Spain?
The 3% property tax is an amount that a buyer pays to the tax office when buying from a non-resident. This is the government’s way to ensure the seller’s taxes are paid. After everything is checked, the seller can request the money back.
Do non-residents pay property tax in Spain?
Yes, non-residents pay property tax (IBI) every year, between 0,4% to 1,1% of the property’s cadastral value. They also pay tax on rental income and on the profits from selling the property. Both of those taxes are 19% – 24%.
What is the 183 day rule in Spain?
If you’re in Spain for more than 183 days in a year, you’re considered a tax resident and pay taxes on worldwide income and assets in Spain.
Is there annual property tax in Spain?
Yes, there is an annual property tax in Spain known as IBI which property owners are obligated to pay every year. It’s 0,4% to 1,1% of the cadastral value of the property. You can find this value by asking your local council. If your property is worth more than €3 million, you might also be required to pay the Solidarity Tax
What is the tax on selling a property in Spain?
When selling a property, residents pay 19% to 23% tax on the profit. EU non-residents pay 19%, and non-EU non-residents pay 24%.
Are there property taxes in Spain?
Yes, there are property taxes in Spain. Property owners pay IBI tax yearly, about 0,4% to 1,1% of the property’s cadastral value. For non-residents, income from rent is taxed at 19% to 24%, paid every 3 months. Also, selling a property involves a profit tax of 19% to 24%. You can get the property’s cadastral value from the local council.
What is IBI Property Tax in Spain?
IBI is an annual tax for owning property, ranging from 0,4% to 1,1% of the property’s cadastral value. You can find this value by asking your local council.
What is Property Transfer Tax in Spain?
When buying a previously owned property, you pay a transfer tax of 6% to 10%, depending on the region.
What are the pitfalls of buying a property in Spain?
When buying property in Spain, watch out for hidden debts like unpaid taxes, properties without renovation or rental licenses, legal complications, and unauthorized construction. We recommend hiring a local lawyer to check everything and guide you, ensuring all legal matters are sorted.
