The three moments of property tax

Spanish property taxation breaks down into three distinct moments: purchase, ownership, and sale. At each moment, the tax mix depends on: whether the property is a resale or a new build, whether you're a Spanish tax resident or a non-resident, and which autonomous community the property sits in.

Foreign buyers usually end up as non-residents for tax purposes, unless they relocate permanently and spend more than 183 days a year in Spain. This status matters more than most buyers realise — it changes your income tax, your eventual capital gains tax, and your exposure to wealth tax.

Quick rule of thumb

Budget 10–13% on top of the purchase price for buying costs, all in. That covers transfer taxes, notary, registry, legal fees, and sundry. The exact number depends on resale vs. new build and the autonomous community.

At purchase: resale properties (ITP)

For resale properties, the buyer pays Impuesto sobre Transmisiones Patrimoniales (ITP) — transfer tax. This is charged as a percentage of the higher of either the declared sale price or the "reference value" assigned by the Catastro. The autonomous community sets the rate and collects the revenue, so rates vary significantly:

For a €500,000 resale apartment in Marbella, ITP is €35,000. For the same price in Valencia, it's €50,000. For €500,000 in Mallorca, it's about €43,000. The regional differences add up to real money.

The reference value trap

Since 2022, the tax authority can use the Catastro's "reference value" (valor de referencia) as the tax base if it's higher than the declared price. In a softening market or a negotiated purchase, you can end up paying ITP on a higher value than you actually paid. Check the reference value on the Catastro portal before agreeing a price.

At purchase: new builds (IVA + AJD)

For new-build properties (first sale from the developer), you pay:

Total for a new-build residential property: 10% IVA + 1.2–1.5% AJD = 11.2–11.5%.

In regions with low ITP (Andalucía's 7%, Madrid's 6%), resale is clearly tax-advantaged for buyers. In regions with high ITP (Valencia, Catalonia at 10%+), the calculation is closer — a new build sometimes costs only slightly more in tax.

Plusvalía — who really pays it

The plusvalía municipal is a municipal tax on the increase in the value of urban land (only the land, not the building) between when the seller bought and when they sell. The legal liability is the seller's. In practice, though, negotiation matters: in tight markets or with motivated sellers, buyers are sometimes asked to absorb part or all of it.

The calculation is specific to each municipality but typically results in a few hundred to a few thousand euros for apartments, and more for villas with significant land. It's paid within 30 days of the sale. If unpaid, it creates an afección fiscal on the property that can eventually become the buyer's problem — see our debts guide.

Annual: IBI (Impuesto sobre Bienes Inmuebles)

IBI is the annual municipal property tax — roughly equivalent to UK council tax or US property tax. It's calculated as a percentage of the cadastral value (valor catastral), which is typically lower than the market value. The rate varies by municipality, from about 0.4% to 1.1%.

For a Costa del Sol apartment with a cadastral value of €200,000 and a municipal rate of 0.7%, IBI is €1,400 per year. Paid once annually, usually between August and November, automatically billed to the owner of record on 1 January.

IBI is the same whether you're a resident or non-resident. It's the seller's obligation for the year they own the property on 1 January, and then becomes yours. Set up a direct debit with your Spanish bank to avoid missing it — late penalties are 5% for the first three months, 20% after that.

Annual: non-resident income tax (IRNR)

This is the tax foreign buyers most often don't know about. If you are a non-resident owning a Spanish property, the Spanish tax authority considers you to be receiving an "imputed income" from the property — even if it's your own holiday home and you never rent it out.

The calculation:

For a UK-resident owner of a Costa del Sol apartment with a €200,000 cadastral value:

If you actually do rent out the property, you declare the real rental income instead of the imputed income, at the same rates — 19% for EU/EEA, 24% elsewhere. Expenses (property management, mortgage interest, depreciation) are deductible only for EU/EEA residents, not for non-EU residents. This difference matters for UK owners since Brexit.

Practical tip

Many foreign owners use a fiscal representative or gestor to handle the annual Form 210 — they charge €80–€150 per year. Worth it for the peace of mind and to ensure the form is filed correctly.

Wealth tax — the rules that actually apply

Spain's wealth tax (Impuesto sobre el Patrimonio) applies to non-residents based on the net value of their Spanish assets — primarily property. Residents pay on worldwide assets. For non-residents, the threshold and rates vary by region, and the rules have been shifting politically.

As a baseline, non-residents face:

Regions that have reduced or eliminated wealth tax in practice include Madrid (100% bonification — effectively zero tax), Andalucía (100% bonification since 2022), Galicia (50% bonification). The Balearic Islands, Catalonia, and Valencia maintain the tax more fully.

Since 2022 there's also a solidarity tax (Impuesto de Solidaridad de las Grandes Fortunas) that applies above €3M on a progressive basis, designed to catch wealth shielded by regional bonifications. It's complex and politically contested.

Practical take: if your Spanish property is worth less than €700,000 (or less than €1.4M for a couple), you probably don't owe wealth tax. If it's worth more, get specialist Spanish tax advice. Rules change; current treatment is not a forever commitment.

When you sell: capital gains

When you eventually sell, you pay capital gains tax on the profit — sale price minus (original purchase price + purchase costs + improvements + selling costs).

Rates for non-residents (2026):

A procedural point that catches many foreign sellers: when a non-resident sells Spanish property, the buyer is required to withhold 3% of the purchase price and pay it directly to the Spanish tax authority (Modelo 211). This is an advance on the seller's capital gains tax. If your actual tax liability is less than the 3% withheld, you claim the difference back — a process that takes months.

If you've made a loss (rare, but possible), the 3% withholding still happens, and you claim the full amount back.

NIE — the thing you need first

Before you can pay any of these taxes — before you can actually buy a property at all — you need an NIE: Número de Identidad de Extranjero, your foreign ID number in Spain. You need it to sign at the notary, open a bank account, pay ITP, file Form 210, and everything else.

Two ways to get one:

Start this process as soon as you decide you're serious about buying. It's the single most common source of delay in the run-up to arras.

The interaction of all these taxes is where Spanish tax accountants earn their fees. If your property purchase is anything more complex than a modest apartment for personal use, a consultation with a Spanish tax specialist before closing is well worth the few hundred euros.

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