Spain: Property Taxes

Taxes are, unfortunately, unavoidable. You may be able to ignore them for a short time but if you do so, they will eventually come back to bite you on the behind. The best thing to do is to educate yourself on the various taxes which property buyers in Spain may have to pay, right from the word go. Here, we will provide you with a list of the various taxes and in which circumstance you may have to pay them.

Transfer Tax

If you are buying a property which is brand new, and you are the first owner, this tax does not apply to you. The transfer tax applies to anyone purchasing a property which has already been owned by someone else. The tax is called Impuesto de Transferencia de Propiedad in Spanish, and is currently set at 7% of the purchase price.

Wealth Tax

This annual tax applies to both residents and non-residents of Spain. The amount is calculated on the net value of the property, minus deductions such as mortgage, and is done so on a sliding scale ranging from 0.2% to 2.5%. The higher the value of the property, the higher the amount of tax you will pay.

New Property Purchase Tax

This is the tax which you will have to pay if you are buying new property. It is set at 7% IVA, whether the property is being built or is finished at time of purchase, plus an added 0.5% stamp duty.

Income Tax for those not living in Spain and not renting out their property

This tax is for non-residents, who own property in Spain and do not rent out their property. So, if you use the property solely for the enjoyment of yourself, friends and family, and not for income purposes, AND you do not earn any other taxable income in Spain, this tax is for you. Although you will not gain any income from the property, you are still deriving benefit from the ownership of it, and therefore must pay an income tax.

Income Tax for those not living in Spain and who ARE renting out their property

This tax is, again, for non-residents, who own property in Spain and plan on renting it out. In this case, you will pay your income tax on the gross rent, i.e. BEFORE deductions, and comes to 24-25%. It is paid either monthly or quarterly.

Local Property Tax

This is the main tax which any owner of property in Spain must pay. It is paid yearly to the town hall and varies depending on where you purchase your property. It will generally range from 0.5-1%.

And finally... Capital Gains Tax

This tax is paid by anybody who has owned their property for more than one year, and is selling it on. You must pay the tax on any profit you made from the resale of the property.