Buying property in Spain is an exciting investment, but it also comes with tax responsibilities that you should be aware of. Whether you're purchasing a vacation home, an investment property, or planning to move to Spain permanently, understanding the different property taxes can help you budget properly and avoid surprises. In this guide, we’ll break down the key property taxes in Spain in a straightforward and practical way.
Types of Property Taxes in Spain
1. IBI (Impuesto sobre Bienes Inmuebles) – The Annual Property Tax
Think of IBI as Spain’s version of a local council tax. This is a yearly tax paid to the local municipality, based on your property's cadastral value (a government-assessed value, usually lower than market value). The rates range from 0.4% to 1.3%, depending on where your property is located. It’s an important one to keep in mind since it’s unavoidable and recurs every year.
2. Plusvalía Municipal – Capital Gains Tax on Land Value
If you ever decide to sell your property, you’ll need to pay this tax on the increase in the land’s value since you bought it. It’s charged by the local government and varies from town to town. Some municipalities charge more than others, so checking beforehand is a good idea.
3. Non-Resident Income Tax (IRNR) – If You Own but Don’t Live in Spain
Even if you don’t rent out your Spanish property, you still need to pay a tax for simply owning it. This is known as imputed income tax, which is calculated based on the cadastral value of your home:
- EU/EEA residents: 19%
- Non-EU residents: 24%
If you rent out your property, you’ll be taxed on the rental income, but you can deduct expenses like maintenance and mortgage interest (if applicable).
4. Wealth Tax – Only for High-Value Properties
If your Spanish assets exceed certain thresholds (which vary by region), you might need to pay a wealth tax, which ranges from 0.2% to 3.5%. However, some regions offer reductions or exemptions, so it's worth checking if it applies to you.
5. Transfer Tax (ITP) or VAT – Taxes on Buying Property
- If you buy a new property, you’ll pay 10% VAT plus a 1.5% stamp duty.
- If you buy a resale property, instead of VAT, you’ll pay a transfer tax (ITP) ranging from 6% to 10%, depending on the region.
Property Tax Rates in Different Spanish Cities
Here’s a quick look at how property tax rates vary across major cities:
City
IBI Rate (%)
Transfer Tax (ITP) (%)
Madrid
0.51 – 0.75
6% – 10%
Barcelona
0.66 – 1.10
10%
Valencia
0.40 – 0.90
10%
Seville
0.50 – 1.10
8% – 10%
Malaga
0.45 – 1.10
7% – 10%
📊 Check out our infographic comparing tax rates in different Spanish cities!
Real-Life Tax Calculation Example
Let’s say you buy a resale apartment in Madrid for €300,000. What taxes should you expect?
- Transfer Tax (ITP) (6%): €18,000
- Annual IBI (assuming 0.6% on a €150,000 cadastral value): €900
- Non-Resident Income Tax (1.1% of cadastral value taxed at 19%): €313.50 per year
Knowing these costs upfront helps you plan your budget better and avoid any unpleasant surprises.
How to Pay Property Taxes in Spain
Paying your taxes is quite straightforward:
- IBI: Paid directly through your local town hall’s website or set up a direct debit via your Spanish bank.
- Non-Resident Income Tax: Filed using Form 210 on the Spanish Tax Agency’s website.
- Wealth Tax: If applicable, it must be declared annually.
Tax Deductions and Benefits
Good news! If you rent out your property, you may be eligible for tax deductions on expenses like mortgage interest, insurance, and maintenance. Some regions also offer Wealth Tax exemptions or reductions if you use the property as your main residence.
Useful Government Resources
To make life easier, here are some official links to help you calculate and pay your taxes:
- IBI Calculator: [Check your local government website]
- Income Tax for Non-Residents: Agencia Tributaria – Form 210
- Wealth Tax Information: Agencia Tributaria – Wealth Tax
Final Thoughts
Owning property in Spain is a fantastic investment, but it’s crucial to understand the tax responsibilities that come with it. Whether you’re buying, selling, or simply enjoying your home, staying informed on tax obligations will help you manage your finances effectively.
FAQs
1. Do I have to pay tax on property in Spain?
Yes, property owners in Spain must pay several taxes, including the IBI (Impuesto sobre Bienes Inmuebles), an annual local property tax, and non-resident income tax (IRNR) if the property is not rented. Additional taxes apply when buying or selling property.
2. How much is property tax in Spain per year?
The annual property tax (IBI) varies by municipality but generally ranges from 0.4% to 1.3% of the cadastral value. Wealth tax may also apply to high-value properties.
3. How much is property transfer tax in Spain?
Property transfer tax (ITP) applies to resale properties and ranges from 6% to 10%, depending on the region. New properties are subject to 10% VAT (IVA) plus a 1.5% stamp duty (AJD).
4. What is the tax rate in Spain for foreigners?
Non-residents who own property in Spain pay:
- Non-resident income tax (IRNR): 19% for EU residents and 24% for non-EU residents on imputed or rental income.
- Capital gains tax: 19%-28% on property sales.
- Wealth tax: 0.2%-3.5% on properties exceeding the exemption threshold.
5. Can a foreigner buy a house in Spain?
Yes, foreigners can buy property in Spain without restrictions. They will need a NIE (Número de Identificación de Extranjero), a Spanish bank account, and must comply with tax obligations.
6. What are the taxes on buying property in Spain?
- New properties: 10% VAT + 1.5% stamp duty.
- Resale properties: 6%-10% property transfer tax (ITP).
- Notary and registration fees: Typically 1%-2% of the property price.
7. How much tax do you pay in Spain when you sell a house?
- Capital gains tax: 19%-28% depending on profit.
- Plusvalía Municipal: A tax on land value increase, calculated based on the cadastral value and years of ownership.
8. What is the non-resident property tax in Spain?
Non-residents must pay an annual non-resident income tax (IRNR) even if the property is not rented. The tax is 19% (EU residents) or 24% (non-EU residents) of a calculated imputed income based on the cadastral value.
9. Do US expats pay taxes in Spain?
Yes, US expats must pay Spanish property taxes and may also be subject to US taxes due to worldwide taxation. However, tax treaties and deductions (e.g., Foreign Tax Credit) may help reduce double taxation.
10. Does Spain have a tax treaty with the US?
Yes, Spain and the US have a Double Taxation Agreement (DTA) to prevent US citizens from being taxed twice on the same income. This applies to income and certain taxes, including capital gains.
