Buying property in Spain is a dream shared by countless foreign investors and retirees who wish to enjoy a sunlit lifestyle along the Costa del Sol or own a profitable holiday home. However, before signing that exciting contract, understanding Spain’s complex property tax system is essential. Did you know that property tax obligations differ significantly between residents and non-residents? Many first-time buyers overlook this, only to face unexpected costs later.
In this 2025 guide, we’ll walk you through everything you need to know about Spanish property taxes, from purchase-related fees to annual obligations and capital gains. Whether you’re an international buyer eyeing a villa in Marbella or an investor expanding your European portfolio, this guide will help you plan wisely, avoid penalties, and enjoy stress-free ownership.
Understanding Property Taxes in Spain for Foreign Buyers
Spain’s property tax system is regulated by both national and regional authorities. While the national government sets general tax rules, each autonomous region can adjust rates for certain taxes, including transfer tax and inheritance tax.
The main difference for property owners lies in whether they are residents or non-residents. Residents are taxed on worldwide income, while non-residents are only taxed on income generated in Spain, such as rental earnings or property sales. Common misconceptions include assuming property taxes are the same across Spain or that non-residents are exempt from local taxes. In reality, every property owner, regardless of nationality, must comply with municipal and state tax requirements.
Taxes When Buying Property in Spain
When purchasing property, buyers face several one-time taxes. New properties are subject to IVA (Value Added Tax), currently at 10 per cent. Additionally, buyers must pay Stamp Duty (AJD), usually between 0.5 and 1.5 per cent, depending on the region.
For resale properties, Transfer Tax (ITP) applies instead of IVA. This tax ranges between 6 and 10 per cent depending on the location. For instance, Andalusia currently offers competitive rates to attract foreign investment. These taxes can significantly impact the total cost of acquisition, so buyers should include them in their financial planning from the outset.
Annual Property Taxes in Spain
Once the property purchase is complete, owners are responsible for annual taxes. The IBI (Impuesto sobre Bienes Inmuebles) is a municipal property tax calculated based on the cadastral value of the property. Rates vary between 0.4 and 1.1 per cent depending on the municipality.
Non-resident owners must also pay Non-Resident Income Tax (IRNR), even if the property is not rented out. This tax is calculated as a percentage of the property’s assessed value or actual rental income. To avoid fines, ensure tax returns are filed annually through the Spanish tax agency (AEAT). Many foreign owners hire tax advisors or gestores to manage these obligations efficiently.
Selling a Property in Spain – Capital Gains and Other Taxes
When selling a Spanish property, owners must pay Capital Gains Tax (CGT) on the profit made from the sale. In 2025, rates for non-residents typically range between 19 and 28 per cent. Local councils also impose the Plusvalía Municipal Tax, based on the increase in the property’s land value since the last sale.
There are ways to minimise these taxes. Sellers who reinvest their proceeds in another primary residence within the European Union may qualify for CGT exemptions. Keeping accurate records of purchase and renovation expenses can also help offset taxable gains.
Inheritance and Gift Taxes in Spain
Spain’s Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones) applies when property is transferred through inheritance or as a gift. Each region sets its own allowances and tax rates. For example, Andalusia offers generous reductions for close family members, making it a popular choice for foreign buyers with long-term estate plans.
Foreign heirs should be aware that Spanish law applies to property located within Spain, regardless of the deceased’s nationality. However, Spain has double taxation treaties with many countries, preventing heirs from being taxed twice on the same asset.
Tax Advantages and Deductions for Foreign Buyers
Spain provides several incentives for property investors. Deductions are available for expenses related to mortgage interest, property maintenance, and rental management. Investors may also benefit from regional tax reliefs for energy-efficient renovations or rural property purchases.
Corporate ownership structures can offer further advantages, such as simplified tax filing and reduced capital gains obligations for frequent investors. Consulting a bilingual tax specialist ensures that you can optimise your ownership strategy based on your individual goals.
How to Pay Property Taxes in Spain
Paying property taxes in Spain is straightforward when you know the process. First, you’ll need an NIE (Número de Identificación de Extranjero), a unique identification number for foreign property owners. Taxes such as IBI and IRNR can be paid online through local government portals or at banks using payment codes.
Deadlines vary by region, but annual property taxes are typically due between May and October. Missing deadlines can lead to surcharges and interest, so setting reminders or appointing a tax representative is highly recommended.
Common Tax Mistakes Foreign Buyers Make
Foreign buyers often underestimate how regional tax variations affect their costs. Others fail to declare rental income or forget to update their tax records after selling a property. Some overlook non-resident income tax altogether, which can result in penalties. Hiring a qualified solicitor or tax consultant can help prevent these common and costly errors.
Expert Tips for Managing Property Taxes Efficiently
Engaging a bilingual tax advisor who understands both Spanish and international taxation systems can save you time and money. Digital tools like online portals or dedicated property tax management apps can simplify filing and payment tracking. Maintaining organised financial records, including invoices and property-related documents, makes annual tax preparation much smoother.
For long-term investors and expatriates, strategic tax planning is essential to maximise returns and remain compliant with Spanish laws.
Why Choose Eliasson Estates?
Eliasson Estates is more than a real estate agency it’s your trusted partner in navigating Spain’s property market. With deep local expertise in the Costa del Sol region and years of experience assisting international buyers, the team ensures every transaction is transparent, efficient, and stress-free.
Their local market knowledge helps clients find the best opportunities at competitive prices. They offer personalised guidance through every stage of the buying process, including assistance with legal, tax, and relocation matters. Eliasson Estates combines modern marketing tools with a dedicated client-first approach, ensuring smooth communication and exceptional results. Whether you’re purchasing, selling, or investing, you can count on their professionalism and integrity.
FAQs
Do foreign buyers pay property tax in Spain?
Yes. All property owners, regardless of nationality, must pay annual property taxes such as IBI and, for non-residents, the IRNR.
How much are property taxes in Spain in 2025?
The total depends on the property type, value, and region. Buyers can expect between 6–10 per cent in purchase-related taxes, plus annual IBI ranging from 0.4-1.1 per cent of the cadastral value.
Can I pay my property taxes online?
Yes. Most municipalities and the national tax authority (AEAT) allow online payments through their official portals.
Do I need a tax advisor in Spain?
While not mandatory, hiring a qualified advisor is strongly recommended for foreign owners unfamiliar with the Spanish tax system.
Conclusion
Understanding property taxes in Spain is crucial for protecting your investment and ensuring long-term financial stability. From purchase taxes to annual obligations and capital gains, being informed helps you plan effectively and avoid costly surprises.
If you’re ready to invest confidently in Spanish real estate, trust the expertise of Eliasson Estates. Contact Eliasson Estate today to begin your property journey with professional guidance and peace of mind.