A sunny terrace in Marbella or a lock-up-and-leave flat in Estepona can be a wonderful investment in your lifestyle. But the asking price is only one part of the financial picture. This Spanish property tax guide explains the taxes that can arise when you buy, own, let and eventually sell a home in Spain, with the practical detail international Costa del Sol buyers need before they commit.
Spanish tax rules depend on several factors: whether the property is new or resale, where you are tax resident, whether you rent it out and its cadastral value. Rates and allowances can change, so treat this as a clear planning guide rather than personal tax advice.
Taxes to budget for when buying
The tax due on completion is determined mainly by whether you are purchasing a resale property or a newly built home from a developer. It is paid in addition to the agreed purchase price, as well as notary, Land Registry and legal costs.
Resale homes: Transfer Tax
For most resale properties in Andalusia, buyers pay Transfer Tax, known as ITP. The general rate is currently 7% of the declared purchase value. This is usually the largest purchase tax for a buyer acquiring an existing villa, townhouse or flat.
The taxable value is not always simply the figure agreed with the seller. Spain uses a reference value for many properties, based on cadastral information. If the purchase price is below the applicable reference value, ITP may be assessed on the higher figure. Your solicitor should check this before exchange so that the tax allowance in your budget is realistic.
New-build homes: VAT and stamp duty
A new residential property bought directly from a developer normally attracts VAT, known in Spain as IVA, at 10%. In Andalusia, buyers also generally pay Stamp Duty, or AJD, currently 1.2%.
That means tax on a new-build purchase is commonly around 11.2% before professional and registration costs. It can still be an attractive route for buyers who value modern energy standards, warranties and a predictable handover process, but the tax treatment should be compared like for like with a resale alternative.
The annual taxes every owner should understand
Owning a Spanish home brings recurring costs. Some are taxes, while others, such as community fees and insurance, are regular ownership expenses rather than taxes. Keeping them separate helps you understand the true yearly cost of your home under the sun.
IBI: the local property tax
IBI, or Impuesto sobre Bienes Inmuebles, is the annual municipal property tax. It is based on the cadastral value, not the current market value, and is collected by the local town hall. In Marbella, Benahavís, Estepona and other Costa del Sol municipalities, the final bill varies according to the local rate and the property’s cadastral record.
IBI is normally due once a year. Direct debit can make payment easier, especially for non-resident owners. Ask for the latest receipt during due diligence, because it confirms the amount and helps identify any unpaid charges that should be settled by the seller before completion.
Rubbish collection and other local charges
Many owners also receive a rubbish collection charge, often called a basura tax. The amount and billing timetable vary by municipality and, in some areas, it may appear through a different local collection arrangement.
Community charges are not a tax, but they deserve equal attention when buying a home in an urbanisation. They may cover gardens, lifts, security, pools, communal insurance and maintenance. A beachfront development with extensive facilities can have materially higher fees than a simple town-centre flat, even where the purchase price is similar.
Non-resident property tax: relevant even if you do not rent
This is one of the most commonly missed obligations for overseas owners. If you are not Spanish tax resident and own a property for your own use, Spain can tax a notional income from that property. This is usually called non-resident imputed income tax.
The calculation starts with the cadastral value. A deemed income is generally calculated at 1.1% where the cadastral value has been revised within the required period, or 2% where it has not. Tax is then applied to that deemed income. The rate is typically 19% for residents of EU or EEA countries and 24% for many other non-residents, subject to the rules in force and any relevant tax treaty.
The return is generally submitted on Form 210 for the relevant tax year. A property owned jointly normally requires each owner to declare their share. This applies even if the home sits empty for much of the year and earns no rental income.
Tax on Spanish rental income
Letting can help cover ownership costs, whether you own a holiday home in Puerto Banús or a long-term rental in San Pedro de Alcántara. It also creates additional tax and compliance duties.
Non-resident owners normally report Spanish rental income through Form 210. EU and EEA residents can generally deduct qualifying expenses directly connected to the rental, such as community fees, IBI, insurance, repairs, management fees and mortgage interest, provided they retain proper invoices and evidence. Owners resident outside the EU and EEA are often taxed on gross income instead, which can significantly alter the net return.
For holiday rentals, tax is not the only consideration. Registration requirements, guest reporting rules, licence conditions and local restrictions may apply. Long-term and holiday letting operate differently, so do not assume a property suitable for one is automatically compliant for the other. Good management protects the guest experience, but it also creates the records needed for accurate reporting.
If you become Spanish tax resident, your position changes. Residents normally declare worldwide income through the annual Spanish personal income tax return, rather than following the non-resident process alone. Cross-border advice is especially valuable if you retain income, pensions or property in the UK or another country.
Wealth tax and the solidarity tax
Spain’s wealth tax is assessed on net assets, including Spanish property, after permitted debts and allowances. The exact outcome depends on residence, ownership structure, asset values and regional rules.
Andalusia has applied generous regional wealth-tax relief in recent years, but high-value owners should not assume this ends the discussion. Spain’s state-level solidarity tax on large fortunes can apply above the relevant national thresholds, and national rules may override or interact with regional relief. The detail is technical, particularly for couples, company ownership and international portfolios.
For many mainstream holiday-home buyers, wealth tax will not be the main cost. For luxury villa purchasers or investors with substantial worldwide assets, it should be addressed before completion, not after the first filing deadline.
Taxes when you sell a Spanish property
Selling triggers two separate tax questions. The first is capital gains tax. Non-resident sellers generally face Spanish tax on the gain made from the sale, after allowable acquisition, improvement and sale costs. The buyer is normally required to retain 3% of the sale price and pay it to the Spanish Tax Agency as an advance payment towards the seller’s capital gains liability. The seller then files the relevant return to calculate the final amount due or claim a refund where appropriate.
The second is municipal plusvalía. This is a local tax connected to the increase in the value of the urban land during the ownership period. It is usually the seller’s responsibility, although contracts should state this clearly. The calculation is municipality-specific and can be affected by whether there has been a real increase in land value.
Keep your purchase deed, invoices for qualifying improvements, estate agency invoice and selling costs from day one. They may be valuable evidence years later when calculating a gain. Routine maintenance is not automatically treated in the same way as a genuine capital improvement, so clear paperwork matters.
A sensible tax checklist before you proceed
Before reserving a property, ask your legal representative to confirm whether it is resale or new build, the current IBI and rubbish charges, the cadastral and reference values, any community debts, and the tax consequences of your intended use. If you expect rental income, obtain advice that reflects your country of residence rather than relying on a headline yield calculation.
Once you own, set aside funds for annual charges and do not ignore tax correspondence because you live abroad. A reliable local support team can help organise bills, property checks, rental records and tax reporting, while your independent tax adviser deals with your individual return.
The right home should feel exciting, not administratively daunting. With the figures checked early and the right professional support in place, you can focus on enjoying the Costa del Sol with far fewer surprises later.