Planning to buy a property in Spain? Before you decide to invest in the Costa Blanca or Costa del Sol, it is worth knowing the current tax regulations that may affect the total cost of the transaction and future liabilities. Spain, like other European countries, imposes various taxes related to the purchase, ownership and sale of property. Familiarise yourself with the most important charges to avoid unexpected costs.
Tax on the Purchase of Real Estate in Spain
ITP tax – Secondary market
When you buy a property from the secondary market, you have to pay an ITP (Impuesto sobre Transmisiones Patrimoniales). The ITP rate varies from region to region:
- Costa Blanca (Valencia) – 10%
- Costa del Sol (Andalusia) – 7%
Thanks to the lower ITP tax in Andalusia, buying a property on the Costa del Sol can be more advantageous in terms of transaction fees.
VAT and AJD – Primary Market
If you are buying a new property from a property developer, you will pay 10% VAT (IVA) and ACT (AJD) instead of ITP:
- Costa Blanca (Valencia) – 1.5%
- Costa del Sol (Andalusia) – 1.2%
Although the differences are small, they can make a difference for more expensive investments.
Taxes for Property Owners in Spain
Property Tax (IBI)
Every property owner in Spain must pay the IBI (Impuesto sobre Bienes Inmuebles) property tax annually. Its amount depends on the cadastral value of the property and the local rates set by the municipalities.
- In the Costa Blanca, the IBI tax is often lower compared to prestigious Costa del Sol locations, where property prices are higher.
Non-Resident Income Tax (IRNR)
If you own a property in Spain but are not resident, you must 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 residents (without deductibility of property maintenance costs)
In recent years, the rules have become less favourable for non-EU investors, as the rental tax is charged on the full gross income, with no deduction for running costs.
Real Estate Sales Tax in Spain
Capital Gains Tax
When selling a property in Spain, capital gains tax must be paid:
- 19% for properties owned up to 6 years
- Progressive tax scale for properties over 6 years old
In addition, there is a local Plusvalía Municipal tax, charged by municipalities depending on the increase in land value.
Gift and Inheritance Tax
Spain also levies a gift and inheritance tax(Impuesto sobre Sucesiones y Donaciones). The amount of tax depends on the region and the degree of relationship between the donor and the recipient. In the Costa Blanca and Costa del Sol, tax breaks are available for the immediate family.
New Regulations for Non-EU Buyers – 100% Tax
The latest tax legislation in Spain provides for an additional 100% tax for certain non-EU investors. This means that the total cost of buying a property can double. These regulations aim to reduce speculation and increase the availability of housing for Spanish residents and EU citizens.
Before buying a property, it is advisable to consult a tax adviser to check whether the chosen property is subject to the new tax and what options are available to non-EU investors.
Taxes in Spain – Key Information for Investors
- The Costa del Sol offers a lower ITP tax on the secondary market, which may be more advantageous for buyers.
- The Costa Blanca has a stable tax environment for new properties.
- Non-EU nationals face a higher tax burden, especially when renting property.
- The new rules could double the cost of purchase for non-EU investors.
When planning to buy a property in Spain, it’s a good idea to include all taxes in your budget to avoid unforeseen costs. Consult an expert and make an informed investment decision to enjoy your dream home in Spain without unnecessary complications!
