Property tax in spain

All property owners in Spain are obligated to fulfill annual tax obligations consisting of three distinct categories.

Residents are accountable for the payment of Income Tax (including Capital Gains Tax) and Real Estate Tax (IBI).

For non-residents in Spain, the tax responsibilities encompass Income Tax (including Capital Gains Tax), Property Tax, in addition to the Non-resident Property Tax.

In this comprehensive article, we will provide a thorough examination of the array of property taxes that you must be aware of and comply with when purchasing a property in Spain.

Non resident Tax on Property Purchases

If you are a non-resident, you are the taxes on property are 3:

  • Income Tax (including Capital Gains Tax).The Income Tax for non-residents only takes into account income from property; since income from wages must be declared in your country of residence. If the property is for your own use, you must pay a certain percentage of your property; if you rent the property, you must declare the amount you receive as rent.
  • Annual Real Estate Tax: Read more below.
  • Additional Non-resident Property Tax.

In order to pay these taxes, you must apply for a NIE (Número de Identificación de Extranjero), which is your Spanish tax identification number. Non-Spanish residents of all nationalities also have a number. You should request this number when buying your property. This number identifies you with the Spanish authorities and is necessary when taxes are paid or you have to resolve an issue with the Inland Revenue.  

Annual real estate tax in spain

This property tax is based on the cadastral value and for the same type of property can vary greatly from one city to another, as it is a municipal tax. This real estate tax is called the IBI, “Impuesto sobre Bienes Inmuebles”. The tax increases every year depending on inflation.

For a non-resident, the best solution is to pay the tax by direct debit. The bank will provide you with a form authorising the bank to pay the tax and a copy of the form will be deposited with the local council. This will ensure that taxes are paid at the right time, just like other utility bills owned by you. In addition to the appraised value of your property (cadastral value), the IBI also takes into account your reference cadastral number, which identifies your property at the cadastral office. This can be important in the purchase and sale of properties, because sometimes the physical description does not agree with the description on the title deed. These three taxes cannot be avoided, as the Spanish Tax Agency (Hacienda) will audit the accounts at the time of the sale of the property. A deposit of 3% will be made on the total price of the sale, this being a guarantee against Income Tax and Wealth Tax in the previous four years, as well as a guarantee against your tax debt on Capital Gains. At the time of signing the sales contract, you will also be asked to present the current real estate tax receipt, the IBI.

wealth tax

The wealth tax is a direct and personal tax that is applied individually, not on annual income or transactions, but on the personal wealth of persons, and is calculated based on the value of all the assets of the taxable person. Wealth tax only applies to properties with a purchase price of more than 700,000 euros.

Spanish income tax

Spanish Income Tax does not apply to the principal residence of a resident owner. However, it does apply to a second residence. In the case of a non-resident, as this property is not considered a principal residence, the tax must be paid on an annual basis. The tax payable is 2% of the cadastral value of the property as fictitious rental income. It can be reduced to 1.1% if the cadastral value has been raised since 1994 – and in many cases it has been. For residents, this tax is paid as if it were a profit. For low income, the percentage to pay is 15% and for high income, the percentage is 30% or even 40%. A non-resident is always taxed at a fixed rate of 24% on any income arising in Spain. This 24% income tax should not be confused with the 21% capital gains tax on profits from the sale of assets, such as a house or shares in a company.

buying a house in spain: taxes and expense planning

When buying a property in Spain, taxes play a big role in the planning process. If we take into account the valuation of the house, the notary, the registry and the corresponding taxes (VAT, ITP…), the experts recommend having savings between 10% and 12% of the price of the house. All of them are obligatory expenses that revolve around the purchase and sale of a property, although the ‘invoice’ to be paid will depend on whether it is a new or used house and the amount of the same.

TAXES TO RENT A PROPERTY IN SPAIN

Wether  you are resident or non-resident of Spain, renting your property is legal. However, you must remember that you must report your rental income to the tax authorities. You are actually required to report the income within 30 days of receiving it, but you can request to do so on a quarterly basis to simplify the paperwork. It is true that almost all landlords who rent their properties do not declare this income to the Spanish tax authorities and the chances of being caught are slim. However, Spanish Income Tax takes into account the benefits arising in Spain.

If you are a non-resident, you must pay 24.75% for rental income. You cannot reduce 50% as in the case of resident owners. If you are a resident, you must include your rental income with your other income when making your annual Spanish tax return. If you register your property as a tourist rental, you can charge the cost of maintaining your property as a business expense and offset it against the property taxes.

Frequently Asked Questions About Property Tax in Spain

Does Spain have property tax?

Yes. There are taxes on property in Spain. The local provincial council sets them. 

How much is non resident property tax in Spain?

The taxes range from about 0.405% percent to 1.166% of the property’s cadastral value, 
depending on the province. On your annual property tax (Impuesto sobre Bienes Inmuebles- IBI) 
payment, you will find the most up-to – date cadastral value.

How much time do I have to pay the property taxes in Spain?

Property tax (IBI) is paid by the purchaser once a year, which can be divided into several installments. The annual tax rate is 0.4 percent to 1.1 percent of the property’s cadastral valuation. This tax will be domiciled in Spain on your current account. Example: flat of 350.000, €the IBI will be between 500 €and 700 €a year.

38 thoughts on “Property tax in spain”

  1. Youre not going to believe this but I have lost all day hunting for some articles about this. I wish I knew of this site earlier, it was a good read and really helped me out. Have a good one

    Reply

  2. hmmm….even the LOWEST IBI rate (0.4%) on 350k = 1,400.E….. (and 1.0% is obviously 3,500E)…maybe time for a new accountant? If I owned a 350k flat, I’d plan on an IBI of roughly 3K/yr., assuming 1% and a cadastral of about 325k.
    I know its based on cadastral, not market value, so thats helpful, but still….600 is 0.17%…well below the low-end of your range.
    I’m new to Spanish tax rules, so don’t claim to understand it entirely. (but reasonably good with my 0.4 and 1.0 times table).

    Reply

  3. I am a US resident over 21 and have just inherited a house in Catalonia. The tax implications seem a bit confusing as there appears to be an inheritance tax on the heir, which is quite different as well as possible capital gain upon sale which appears to be based strictly on FMV without any consideration for basis. I am not even sure how I could prove any basis on it. How would I determine what the capital gains rate would be in Catalonia and Would I have to pay this before I sold the house. It makes no sense to come up with such a large amount of tax prior to selling it? Seems a bit backward…

    Reply

    • Hi Richard,

      one of our lawyers should be in contact with you shortly for your questions about taxes in Spain

      Greetings

      Reply

  4. I am being told that the Tax laws changed when the UK left the EU. We now cannot claim any costs against our rental income, so we can only declare and pay tax on the Gross income. Has this always been the case for Non-EU, Non-Resident house owners?

    Reply

  5. Greetings,
    I would like to explin my personal circumstances to one of your lawyers to get a full appreciation of the tax impliation about retiring in Spain.

    Reply

    • Hi Krzysztof,

      one of our lawyers should be in contact with you shortly for your questions about taxes in Spain

      Greetings

      Reply

  6. The ranges given for non-resident property tax and regular property tax (IBI) are the same. I am a EU citizen not living permanently in Spain. Does that mean I will have to pay both – IBI as well as non-resident property tax?

    Reply

    • Hi Gina,

      one of our lawyers should be in contact with you shortly for your questions about taxes

      Greetings

      Reply

  7. So a question, if i retire in Alacante and live there only 5 months out of the year, how much would i pay in taxes if my house was 300,000 euros. Also, how much would i pay in taxes when closing on the house of 300,000 euros?

    Reply

  8. My late father owned a property in Malaga, he died Feb 2019, left Spain inMay 2018 for the UK, to be with family at end of life, with cancer. He moved permanently to Spain in Jan 2016. Previous to that, he spent a lot of time out there, but not full time. My understanding is that the in Spain tax collectors can only go back 5 years. Would you be able to estimate how much tax may be liable from his estate, from the information given. Also I understand that succession tax has a huge allowance of 95% off the value, if children inherit, but that is a personal liability of the beneficiaries, not a liability of the estate, could you please give some basic advice about that please. His property was worth approx 200,000.

    Reply

  9. Hi-

    On a house with a value of $420,000, approximately how much would a non-resident pay in the various annual taxes?

    Best, Will

    Reply

    • Hi Win,

      one of our lawyers should be in contact with you shortly for your questions about property tax .

      Greetings

      Reply

  10. Having sold a larger 4 bed villa €450000, 10 years ago and buying a small 2 bed apartment outright which was €25000 . I have kept all monies in Spanish Bank since and am now ready to sell . I’m resident in UK and have never rented as my Family have used homes for the last 50 years . What taxes will I pay on sale please

    Reply

    • Hi Patrick,

      one of our lawyers should be in contact with you shortly for your questions about property tax in Spain.

      Kind regards

      Reply

  11. I am an Italian citizen, living in Singapore. I am thinking to buy a property in my son name, who is in university student in Madrid.
    Are there taxes implication if I buy the property in his name? For example, should I pay a gift tax? Will he be able to save on ITP, given this is the house where he will live?
    Thanks

    Reply

  12. I am an Italian/EU citizen who is contemplating moving to Spain. I will be living in a rented, furnished apartment. What taxes will I have to pay?

    Reply

  13. Can you please explain the tax implications if I am resident in Spain and don’t own a property here but own a property in South Africa. How will the tax on the South African property be calculated in Spain and how do I need to declare this? I’m currently not receiving a rental income from the property.
    Many thanks

    Reply

  14. I have a question. I have a joint (50%) commercial property that we rented in 2020 and my income from the rent was
    3000 eur. I am renting as a physical person, nonresident.
    The renter pays the taxes, however I have to submit the taxation form.
    More or less, everything in the form is clear, but in the section “Settlement”, I was wondering – do I enter the amount the renter pays
    in the “Withholdings/payments on account”? Because if I do that, my debt ends up being 0 eur, which is the case, but if I don’t fill up
    that part of the form (Withholdings/payments on account), the form calculates as I am the one who needs to pay the taxes, which is
    not the case.

    Reply

  16. HI there, I woud like some advice on property tax in spain-Australia. I own a property in Australia and intend to9 move to Spain and purchase a property there, live there while I rent in Australia. What are the ta implications for me?
    Thanks, some advice please!
    Helen

    Reply

  17. Hello , i am thinking of retiring and moving to Spain , I am looking at buying an apartment on a secure complex, the cost is between 70 and 80,000 , I live in a eu country at the moment , how much tax would I pay a year and what are the monthly costs , thanks ian ,

    Reply

  18. Hi,
    I own a few properties in the Alicamte province of Spain and would appreciate some advice specific to my situation, could you please contact me to discuss this?

    Reply

  19. This site is clear, concise with no jargon. I am delighted to find it. Not sure I know how to save it so I can revisit. I enjoyed browsing and learned a lot. It is helpful to understand these complexities in lay man’s language:)

    Reply

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