Taxes and Costs on Spanish Property – 2025 Guide

Buying property in Spain is a dream for many, whether as a sun-drenched holiday retreat, a retirement escape, or a long-term investment. But understanding the full spectrum of taxes and other costs associated with owning or buying real estate in Spain is crucial to making an informed decision. In this comprehensive 2025 guide, we break down everything you need to know about purchasing, owning, and selling Spanish property, exploring both initial outlays and ongoing payments. Whether you're a resident or non-resident, you'll find detailed explanations, expert advice, and practical examples to help you navigate the Spanish property market confidently and cost-effectively.

Table of Contents

1. Types of Property in Spain
2. Property Purchase Process Overview
3. Upfront Costs of Buying Spanish Property
4. Property Transfer Tax (ITR)
5. VAT (IVA) and Stamp Duty (AJD) on New Properties
6. Notary and Land Registry Fees
7. Legal and Agent Fees
8. Ongoing Ownership Taxes
9. Other Annual Costs and Fees
10. Selling Property in Spain: Taxes and Costs
11. Tax Implications for Residents and Non-Residents
12. Inheritance and Gift Taxes on Spanish Property
13. Regional Variations in Taxes and Fees
14. Tips for Reducing Spanish Property Costs
15. Frequently Asked Questions

Types of Property in Spain

Before delving into the taxes and costs, it's essential to understand the main types of property available in Spain. The classification of property affects which taxes, rates, and regulations apply.

1. Residential Property

• Villas and Detached Houses: Independent homes, often with gardens and private pools, commonly found in coastal or rural areas.
• Apartments and Condominiums: Multi-family buildings or complexes, often featuring shared amenities.
• Townhouses (Adosados): Row homes, usually sharing one or more walls with neighbors, popular in suburban areas.

2. New-Build vs. Resale Property

• New-Build (Obra Nueva): Property purchased directly from a developer, often subject to VAT and Stamp Duty instead of Property Transfer Tax.
• Resale (Second-hand or Segunda Mano): Property purchased from individual owners, where transfer taxes and other fees apply.

3. Commercial Property

• Shops, offices, hotels, and other non-residential real estate, typically governed by distinct tax rates and regulations.

For this guide, the primary focus will be on private, residential real estate, both new-build and resale, although key points for commercial and rural properties will also be highlighted where relevant.

Property Purchase Process Overview

The journey to owning Spanish property involves several steps, each carrying associated costs and taxes:

1. Identifying and reserving a property
2. Securing financing (if applicable)
3. Appointing a legal representative
4. Signing a preliminary contract and deposit payment
5. Conducting due diligence
6. Signing of the Public Deed of Sale (Escritura Pública de Compraventa) before a notary
7. Registering the property with the Land Registry
8. Payment of taxes and fees

Each stage entails its own set of costs, both direct and indirect, which we will explore in depth.

Upfront Costs of Buying Spanish Property

Before you can enjoy your new home under the Iberian sun, you will face an array of startup costs. These typically range from 10% to 15% of the purchase price, which can come as a surprise to many buyers. The actual percentage depends on the region, type of property, and whether you are obtaining a mortgage.

Major Upfront Costs Include:

• Property Transfer Tax (ITR or ITP): For resale properties
• VAT (IVA) and Stamp Duty (AJD): For new-build properties
• Notary and Land Registry Fees
• Legal Fees
• Estate Agent Fees
• Mortgage Costs (if financing is involved)
• Other Administrative Fees

Let’s break down each of these costs in detail.

Property Transfer Tax (ITR)

The Impuesto sobre Transmisiones Patrimoniales (ITR or ITP) is the tax applied on the purchase of a resale (second-hand) property in Spain. This is the largest single tax in most purchases and is paid by the buyer.

How Much is the ITR in 2025?

The ITR rate varies by autonomous community (region), generally ranging between 6% and 11% of the property’s declared purchase price.

• Andalusia: 7% flat rate (following recent reforms)
• Madrid: 6%
• Catalonia: 10% (with reductions for younger buyers, large families, or social housing)
• Valencia: 10%
• Baleares: Scaled rate: 8%-13% (depending on price brackets)

Some regions offer reduced rates for first-time buyers, large families, disabled buyers, or social housing transactions. Always check the latest rates in the region you are considering, as regional governments regularly make adjustments.

Example Calculation

If you purchase a resale apartment in Malaga for €350,000 in 2025:

• Applicable ITR rate: 7% (as per Andalusia 2025 guidelines)
• Tax to pay: 7% of €350,000 = €24,500

VAT (IVA) and Stamp Duty (AJD) on New Properties

If you buy a new-build property (directly from a developer), ITR does not apply. Instead, you must pay two different taxes:

1. VAT (Impuesto sobre el Valor Añadido – IVA)
2. Stamp Duty (Actos Jurídicos Documentados – AJD)

1. VAT (IVA)

• For residential property: 10% of the purchase price (across most of Spain)
• For social housing, sometimes lower: 4% (check region and qualification)
• For commercial property: 21%

The developer is responsible for collecting and remitting VAT.

2. Stamp Duty (AJD)

• Ranges from 0.5% to 2% of the purchase price (varies by region)
• Example: Andalusia, AJD is 1.2%. In Madrid, it is 0.7% for first homes, 1% for others.

Example Calculation

For a new apartment in Valencia priced at €400,000:

• VAT: 10% of €400,000 = €40,000
• AJD: 1.5% of €400,000 = €6,000

Total taxes: €46,000

Notes:

• For plots of land or commercial property, the VAT rate jumps to 21%.
• AJD rate is updated periodically by the respective autonomous community.

Notary and Land Registry Fees

Every property transaction in Spain must be formalized in front of a Spanish notary (notario) as a public deed (escritura pública). Afterward, your ownership must be registered with the Land Registry (Registro de la Propiedad).

Notary Fees

• Fees are regulated within a state-approved scale, generally ranging from 0.1% to 0.5% of the property value.
• Minimum fee: around €600 for smaller properties, rising up to €2,000+ for high-value transactions.

Land Registry Fees

• Also scale-based, typically 0.1% to 0.25% of the property value.
• Average cost: €400–€1,500 depending on location and property price.

Example Calculation

• Purchase price: €350,000
• Notary: ~€1,000
• Land Registry: ~€750
• Total: €1,750

Note: These are estimates. Some notaries may charge for extra documentation or out-of-hours appointments.

Legal and Agent Fees

Engaging professional assistance is crucial for a safe and smooth property purchase in Spain. Let’s explore the associated fees:

Legal Fees (Abogado)

• Using an independent lawyer is highly recommended.
• Lawyer’s fee: Typically 1% to 1.5% of the purchase price plus VAT.
• Minimum fees usually set at €1,500–€2,000 for basic transactions.
• Comprehensive legal service will include due diligence, checks for debts, and contract review.

Estate Agent Fees

• Estate agents (inmobiliarias) in Spain usually charge 5% to 6% of the sales price, paid by the seller.
• Buyers rarely pay estate agent fees unless using a property finder service or buyers’ agent.

Other Administrative Costs

• Obtaining NIE (Número de Identidad de Extranjero): €10–€100 (required for all foreigners in property transactions)
• Translation services, if needed.
• Bank fees (especially for international transfers or Spanish bank account setup)

Ongoing Ownership Taxes

Once you own a property, you’ll face annual taxes and community costs. Knowing these helps you budget correctly for the longer term.

1. Local Property Tax (IBI – Impuesto sobre Bienes Inmuebles)

• Annual tax on property ownership, set and collected by the local municipal authorities.
• Based on the cadastral value (valor catastral), which is usually lower than the market value.
• Typical IBI rates range 0.4% to 1.3% of cadastral value, depending on region and municipality.

For example:

• Cadastral value: €150,000
• IBI at 0.75%: €1,125 per year

2. Waste Collection and Local Fees

Spanish municipalities charge waste collection fees, water rates, and infrastructure levies, generally costing €100–€300 per year depending on location and property size.

3. Non-Resident Income Tax (NRIT/IRNR)

• If you are not a Spanish resident, you must pay tax annually on potential rental income—even if you don’t rent out your property.
• Tax is calculated as:
  • 1.1% or 2% of cadastral value (depending on valuation history) as ‘deemed income’
  • Tax rate: 19% for EU/EEA residents, 24% for others

Example: Non-resident EU owner, cadastral value €150,000, 1.1% = €1,650 ‘income’, taxed at 19% = €313.50 per year.

If you rent out your property, you must pay tax on actual rental income, with deductions allowable for EU/EEA residents.

4. Wealth Tax (Impuesto sobre el Patrimonio)

• Applies to owners whose worldwide assets exceed a threshold (varies between €500,000 and €700,000+ depending on region).
• Tax rates are progressive: from 0.2% to 2.5% (and even higher in some regions such as Valencia, Catalonia, and the Balearics).
• Both residents and non-residents are subject (non-residents only on Spanish assets).

Many regions apply reductions or exemptions; Madrid has a 100% discount, making Wealth Tax effectively zero for now.

Other Annual Costs and Fees

Besides taxes, several other recurring costs apply to Spanish home ownership.

1. Community Fees (Gastos de Comunidad)

• If your property is part of an apartment block or community with shared facilities, you’ll pay community fees for maintenance and services.
• Typical range: €60 – €250 per month, depending on facilities (gardens, pools, lifts, security, etc.). Luxury complexes can exceed €500/month.

2. Utilities

• Electricity, water, gas, and internet – roughly €100 – €200+ per month, depending on usage and property size.

3. Home Insurance

• Building and contents insurance: €150 – €400+ annually, based on coverage and property value.

4. Mortgage Payments

• If financed, you’ll have monthly repayments plus annual mortgage costs such as life insurance and opening/maintenance fees.

5. Other Maintenance

• Gardening, repairs, preventive maintenance and upgrades.
• Budget at least 1% of the property value annually for unforeseen expenses.

Selling Property in Spain: Taxes and Costs

Selling a Spanish property comes with its own tax obligations and costs for the seller. Here’s what to expect in 2025:

1. Capital Gains Tax (CGT or “Plusvalía Municipal”)

• Applies on the profit (difference between sale and acquisition price, adjusted for investing costs and inflation) when you sell your property.
• Tax rates (2025):
  • 19% on first €6,000
  • 21% on €6,001 – €50,000
  • 23% on €50,001 – €200,000
  • 26% on €200,001 upward
• Non-residents: taxed only on Spanish assets at above rates.
• Deductions: allowable for improvements, not maintenance; selling expenses (agents, lawyers), acquisition taxes.

Example:

• Original purchase (2010): €200,000
• Improvements: €20,000
• Selling price: €350,000
• Net gain: €350,000 – €220,000 (purchase + improvements + some acquisition costs) = €130,000 gain
• Capital gains tax (approximate): First €6,000 = €1,140; €6,001–€50,000 = €9,240; €80,000 at 23% = €18,400; Total CGT = €28,780

2. Municipal Capital Gains Tax (Plusvalía Municipal)

• Applied by the municipality on the increase in cadastral land value during your ownership.
• Calculation is complex, based on years of ownership, the local coefficient, and the updated cadastral value of the land (not buildings).
• Range: From a few hundred euros for apartments to several thousand for villas in prime areas.

3. Agent’s Fees

• Sellers typically pay the agent commission (5%–6% of selling price, plus 21% VAT).

4. Legal Fees

• If you use a lawyer to assist with sale, 0.5%–1% of sale price plus VAT.

5. Early Mortgage Redemption Fees

• If repaying the mortgage early due to sale (called cancelación anticipada), the bank may charge a penalty (usually capped at 0.5%–1% of outstanding balance).

6. Retentions for Non-Residents

• When a non-resident sells, the buyer withholds 3% of the sale price and pays it to the Spanish tax office as a prepayment of your capital gains tax. You can reclaim any excess.

Tax Implications for Residents and Non-Residents

Your tax residency status determines how, what, and where you pay taxes related to your Spanish property.

Who is a Spanish Tax Resident?

• You are considered Spanish tax resident if you spend more than 183 days per year in Spain, or if your main financial interests or family reside in Spain.

Residents

• Liable for worldwide income and assets (must declare global wealth if exceeding thresholds).
• All rental and sale income/profits go on your Spanish tax return.

Non-Residents

• Taxed only on income and assets in Spain (rental, deemed rental, capital gains on property sales).
• Must file annual non-resident tax return (IRNR).
• Potential double taxation agreements (DTA) between Spain and your home country may apply, reducing tax liability.

Double Taxation Treaties

Spain has treaties with most EU countries, the UK, the US, and others, preventing double taxation on the same income or gains. Always check with your tax advisor for your specific country circumstances.

Inheritance and Gift Taxes on Spanish Property

Ownership of Spanish property may eventually pass on via inheritance or as a gift (donación). Both are subject to their own tax rules:

Inheritance Tax (ISD – Impuesto sobre Sucesiones y Donaciones)

• Applies to property transfers after death or as gifts while alive.
• Tax rates vary widely by region and depending on the relationship with the deceased (close family receive larger allowances).
• Some regions (Andalusia, Madrid) have large discounts or exemptions for close relatives.
• Non-residents pay on Spanish assets; residents pay globally (with allowances for foreign taxes paid).

Example (2025):

• In Madrid, direct descendants and spouses benefit from a 99% reduction (effectively minimal tax for family).
• In Catalonia, significant allowances for children and spouses, but effective rates can reach 20%–30% for distant relatives or non-family.

Gift Tax

• Taxable on the value of the property gifted, with reductions again dependent on familial relationship and regional rules.

Regional Variations in Taxes and Fees

Spain’s 17 Autonomous Communities exercise considerable autonomy over property taxes, resulting in a patchwork of rates, reductions, and exemptions. Always refer to the latest local regulations for precise figures, but here are some notable regional quirks for 2025:

• Andalusia: Flat 7% ITR for resales (down from previous progressive scales); reduced ISD for family inheritances.
• Madrid: One of the lowest AJD (stamp duty) and ITR rates; practical exemption from Wealth Tax and ISD for close kin.
• Valencia: High transfer taxes (10%), increased Wealth and Inheritance taxes for non-residents.
• Baleares & Catalonia: Tiered, progressive tax structures with high rates for luxury properties and large inheritances.
• Canary Islands: IGIC replaces IVA at 7% for new property, with reduced ITR on resales.

Consult Local Experts

Contact a local lawyer or tax advisor for the most up-to-date information on the region where your target property is located.

Tips for Reducing Spanish Property Costs

Smart planning can significantly reduce the taxes and ongoing costs associated with your Spanish property. Here are some expert tips:

• Negotiate the Declared Purchase Price: The lower the official price, the lower the transfer taxes. However, undervaluing is illegal and may be penalized. Stick to market value.
• Take Advantage of Regional Reductions: First-time buyers, large families, people with disabilities, and buyers under 35 often benefit from lower ITR or AJD rates. Check eligibility with your advisor.
• Consider Property Structure: Holding property via a company may offer tax advantages for investors or multiple owners.
• Offset Rental and Sale Expenses: If renting, keep receipts for allowable deductions (maintenance, interest, community fees, taxes).
• Upgrade Before Sale: Renovations and improvements increase your acquisition cost base, shrinking capital gains tax on resale.
• Claim Treaty Relief: When double-taxed, claim credit in your home country’s return for Spanish tax paid.
• Use Expert Professionals: An experienced lawyer and tax advisor will spot savings opportunities and avoid expensive mistakes.
• Early Payment Discounts: Some regions and municipalities offer small bonuses for early IBI or waste collection payment, especially online.
• Review Annual Declarations: Many foreign owners forget or mishandle NRIT (non-resident income tax) returns, risking penalties. Set reminders.

Frequently Asked Questions

1. What’s the difference between cadastral value and market value?

The cadastral value is a government-assessed value based on factors such as property size, local area, and official tables—almost always lower than actual sale prices. Most local taxes, such as IBI and imputed rental income, use this value, while transfer and capital gains taxes are calculated on the market price or declared transaction price.

2. Can I avoid paying capital gains tax when I sell?

If you are a resident and are aged over 65, and the property has been your permanent home for 3 years, you may be exempt. Further exemptions exist if you reinvest the proceeds into another main home in Spain (within two years). Always consult a tax advisor.

3. Are taxes lower for EU citizens buying in Spain?

EU/EEA citizens enjoy lower non-resident income tax rates (19% vs 24%) and can deduct certain expenses from rental income. Otherwise, transfer, IBI, and VAT taxes are the same for all buyers.

4. Are there additional taxes for foreigners?

No. Taxes are the same for non-residents as for residents for acquisition, although ongoing income tax rates and allowances can differ based on region and residency status.

5. What happens if I under-report the purchase price?

The Spanish tax authorities regularly cross-reference declared property prices with official valuations. Under-declaring can lead to hefty fines and back taxes. Ensure the declared value reflects the true transaction price.

6. What is the Golden Visa and how does it affect taxes?

The Golden Visa program grants residency to non-EU citizens investing €500,000+ in Spanish property. It doesn't provide tax exemptions—standard taxes and costs apply. However, it can have implications for tax residency if you spend significant time in Spain.

7. Can I claim Spanish taxes against my home-country tax bill?

In most cases, yes, via double taxation treaties. For example, UK residents can claim relief for Spanish capital gains tax paid when reporting global income.

8. What if I inherit a Spanish property?

If you inherit, you must pay Spanish inheritance tax, calculated based on your relationship to the deceased and the regional rules where the property is located. Seek Spanish legal advice quickly, as strict deadlines apply for declarations and payments.

9. How can I budget for all costs?

Plan for 10%–15% of the purchase price in addition to your chosen property’s price. Budget yearly for IBI, community, utilities, insurance, and non-resident tax (if applicable).

10. Are Spanish property costs likely to increase in 2025 and beyond?

The trend in recent years has been for rising property values—especially in prime and coastal areas—so both purchase prices and the base for some taxes (IBI, AJD, ITR) could rise. Taxes are subject to periodic review at both national and regional level; monitor local government announcements and engage local professionals for updates.

Conclusion

Understanding the full scope of property taxes and costs in Spain is essential for any buyer, owner, or prospective seller. While initial taxes are the most significant outlay when purchasing, ongoing costs can also be substantial, especially if you own multiple properties, rent out your home, or plan to pass it to heirs. Given the diversity of regional provisions and the evolving regulatory landscape in Spain, professional advice is more important in 2025 than ever before. With careful planning and up-to-date guidance, buying Spanish property can be a smart, fulfilling, and financially sound investment for years to come.

If you have specific questions about your case, do not hesitate to reach out to qualified legal advisors, tax professionals, or local estate agents specializing in your target region. ¡Bienvenidos a España!