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When buying a property in Spain you pay ITP on the resale market (10% on the Costa Blanca in the Valencia region, 7% on the Costa del Sol in Andalusia) or, when buying from a developer, 10% VAT (IVA) and AJD tax (1.5% in Valencia, 1.2% in Andalusia). As an owner you pay IBI property tax every year, and if you are not a resident, IRNR tax as well (19% for EU citizens, 24% for non-EU citizens). On a sale, capital gains tax and the local Plusvalía Municipal are added.
Like other European countries, Spain levies taxes on buying, owning and selling property. Below is a summary of the most important charges to include in your budget before investing on the Costa Blanca or Costa del Sol.
What taxes do you pay when buying property in Spain?
The type of tax depends on whether you are buying a resale property or a new one from a developer.
Resale market – ITP tax
When you buy a resale property, you pay the transfer tax ITP (Impuesto sobre Transmisiones Patrimoniales). The rate depends on the region:
- Costa Blanca (Valencia) – 10%
- Costa del Sol (Andalusia) – 7%
Thanks to the lower ITP in Andalusia, buying on the Costa del Sol can be more favourable in terms of transaction charges.
New-build market – VAT and AJD
When you buy a new property from a developer, instead of ITP you pay 10% VAT (IVA) and AJD tax:
- Costa Blanca (Valencia) – 1.5%
- Costa del Sol (Andalusia) – 1.2%
The difference is small, but on more expensive investments it can matter.
| Tax | Costa Blanca (Valencia) | Costa del Sol (Andalusia) |
|---|---|---|
| ITP (resale market) | 10% | 7% |
| VAT (new-build market) | 10% | 10% |
| AJD (new-build market) | 1,5% | 1,2% |
What taxes does a property owner in Spain pay?
IBI property tax
Every property owner in Spain pays IBI (Impuesto sobre Bienes Inmuebles) tax each year. The amount depends on the cadastral value of the property and on local rates set by the municipalities. On the Costa Blanca IBI is often lower than in the prestigious locations of the Costa del Sol, where property prices are higher.
IRNR non-resident income tax
If you own a property in Spain but are not a resident, you pay income tax on the property even if you do not rent it out. The rates are:
- 19% for EU citizens
- 24% for non-EU citizens (with no deduction of property maintenance costs)
In recent years the rules have become less favourable for investors from outside the EU: their rental tax is calculated on full gross income, with no deduction for running costs.
What tax is paid when selling a property in Spain?
When you sell a property, you pay capital gains tax:
- 19% – for properties held for up to 6 years
- progressive tax scale – for properties held for more than 6 years
In addition, the local Plusvalía Municipal tax applies, charged by the municipality according to the increase in the value of the land.
Is tax payable on gifts and inheritances in Spain?
Yes. Spain charges tax on gifts and inheritances (Impuesto sobre Sucesiones y Donaciones). The amount depends on the region and on the degree of kinship between the donor and the recipient. On the Costa Blanca and the Costa del Sol, tax reliefs are available for close family.
New rules for non-EU buyers – a 100% tax
The latest tax rules in Spain provide for an additional 100% tax for certain investors from outside the EU. This means the total cost of buying a property could double. The rules are intended to curb speculation and increase the availability of housing for residents of Spain and EU citizens.
Before buying, it is worth consulting a tax adviser to check whether the property you have chosen is subject to the new tax and what options investors from outside the European Union have.
Taxes in Spain – the key takeaways for investors
- The Costa del Sol has a lower ITP on the resale market (7% against 10%).
- The Costa Blanca has stable tax conditions for new properties.
- People from outside the EU must expect higher charges, especially when renting out.
- The new rules could double the purchase cost for some investors from outside the EU.
It is worth including all these taxes in your budget in advance, to avoid unforeseen costs.
Frequently asked questions
How much tax is payable when buying a new home from a developer in Spain?
When buying from a developer you pay 10% VAT (IVA) and AJD tax: 1.5% on the Costa Blanca (Valencia) and 1.2% on the Costa del Sol (Andalusia).
How much is ITP on the resale market?
ITP is 10% on the Costa Blanca (Valencia) and 7% on the Costa del Sol (Andalusia).
Does a non-resident pay tax if they do not rent out the property?
Yes. A non-resident pays IRNR tax even if they do not rent out the property: 19% for EU citizens and 24% for non-EU citizens.
What tax will I pay when selling a property in Spain?
Capital gains tax is 19% for properties held for up to 6 years, and a progressive scale applies beyond 6 years. In addition, the municipality charges Plusvalía Municipal on the increase in the value of the land.
What determines the amount of IBI?
IBI depends on the cadastral value of the property and on local rates set by the municipality. On the Costa Blanca it is often lower than in the prestigious locations of the Costa del Sol.
Aria Spain, a licensed agency (RAICV no. 4123), sells new properties from developers on the Costa Blanca and Costa del Sol with no commission for the buyer and helps in English with the NIE number, the mortgage and the visit to the notary. Book a free consultation to go through the costs of buying.
