Thinking about buying your dream home under the Spanish sun? You’re in good company! Spain remains one of Europe’s most desirable property destinations, with over a quarter of all home sales now coming from international investors. From sun-drenched coastal villas to elegant city apartments, Spain offers incredible lifestyle and investment opportunities. But before signing contracts, there’s one essential aspect every buyer must understand, Spanish property taxes and legal obligations.
In this guide, we’ll break down the crucial details about property taxes, legal fees, and ownership requirements in Spain. Whether you’re a non-resident investor or planning to relocate permanently, understanding how Spanish taxation and law apply to foreign buyers will help you purchase confidently and compliantly in 2025.
Understanding Spanish Property Taxes for Foreign Buyers
When buying property in Spain, both residents and non-residents are subject to specific taxes. For resale properties, buyers must pay the Property Transfer Tax (ITP), which varies by region but generally ranges from 6% to 10%. If you’re purchasing a new build, VAT (IVA) at 10% and Stamp Duty (AJD) between 0.5% and 1.5% apply instead.
Another key tax is the Municipal Plusvalía Tax, charged on the increase in land value since the last sale. Non-resident owners who rent out their property must also pay Non-Resident Income Tax (IRNR), calculated on rental income after allowable expenses.
Buyers should be aware of payment deadlines and procedures to avoid penalties. Consulting a Gestor or Spanish tax advisor ensures taxes are filed correctly and helps you benefit from double taxation treaties Spain maintains with many countries, allowing you to claim relief on certain taxes.
Annual and Ongoing Property Taxes in Spain
Once you own a property, several ongoing taxes apply. The Impuesto sobre Bienes Inmuebles (IBI) is a yearly municipal tax based on the property’s cadastral value. Rates depend on the local council but usually range from 0.4% to 1.1%.
Foreign owners may also be subject to the Wealth Tax (Impuesto sobre el Patrimonio), applied to high-value assets exceeding regional thresholds. If you rent out your home, rental income tax must be declared annually, even if the property is only occasionally let.
To maintain compliance, many buyers hire a Gestor to manage their yearly tax filings and ensure timely payments. They can also assist in calculating your total annual tax liability, helping you avoid unexpected costs.
Legal Requirements When Buying Property in Spain
Buying property in Spain requires due diligence. Before proceeding, verify property ownership and ensure there are no outstanding debts or encumbrances. The Nota Simple, a registry extract from the Land Registry, provides key details about the property and its owner.
Transactions must be finalised before a Notary Public, who oversees the signing of the Escritura de Compraventa (title deed). This document is then submitted to the Land Registry to complete the ownership transfer. Buyers often sign a Contrato de Arras (preliminary contract) to secure the property before completion, typically with a 10% deposit.
Legal fees usually range between 1% and 2% of the purchase price, covering your lawyer, notary, and registration costs. Ensuring all documentation is accurate and up to date protects your investment and avoids future disputes.
Tax and Legal Implications for Non-Residents vs. Residents
Residency status plays a significant role in determining your tax obligations. The 183-day rule states that anyone residing in Spain for more than 183 days per year becomes a tax resident. Residents are taxed on their worldwide income, while non-residents are only taxed on Spanish-sourced income.
Residents may face different Wealth Tax thresholds and Inheritance Tax allowances compared to non-residents. Following Brexit, UK citizens are now treated as non-EU buyers, which may affect certain tax exemptions and administrative processes. However, Spain remains highly open to international investment, with bilateral treaties designed to prevent double taxation.
Inheritance Tax, Gift Tax, and Family Ownership Structures
Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones, ISD) applies when property is transferred between family members or gifted. Rates differ across Spain’s autonomous regions, with some offering substantial reductions for close relatives.
For international buyers, it’s important to plan succession early. Many choose to establish joint ownership or create a Spanish company to manage family holdings efficiently. Legal and tax advisors can help structure ownership in a way that minimises inheritance liabilities and simplifies asset transfer to heirs abroad.
Capital Gains Tax and Selling Your Spanish Property
When selling your property, Capital Gains Tax (CGT) applies to the profit earned from the sale. Residents are taxed progressively, while non-residents pay a flat rate of 19%. Allowable deductions include renovation costs, agent fees, and legal expenses.
Non-resident sellers face a 3% retention tax, withheld by the buyer and credited against final CGT liability. Exemptions are available, such as reinvestment relief if proceeds are used to buy another primary residence. Reporting your sale correctly through the Spanish Tax Agency (Agencia Tributaria) ensures compliance and avoids delays in receiving refunds.
Avoiding Legal Pitfalls When Buying Property in Spain
Common pitfalls include overlooking hidden debts, purchasing without proper planning permissions, or relying solely on the developer’s lawyer. Always appoint an independent Spanish lawyer who represents your interests exclusively.
Buyers should also confirm that all building licences are valid and the property is registered properly. Misunderstanding local zoning rules or failing to translate key documents can lead to legal complications later. Real-life cases have shown that due diligence at the start can prevent costly disputes in the future.
Expert Tips for a Smooth and Legally Safe Purchase
Choose experienced professionals, a lawyer, tax advisor, and Gestor familiar with international clients. Ensure all documents are translated and certified when required.
Setting up a Spanish bank account and obtaining an NIE (Número de Identificación de Extranjero) are essential before completion. Most transactions take around 6 to 8 weeks from reservation to final signing, but having a clear checklist helps streamline the process and ensures nothing is overlooked.
Why Choose Eliasson Estates
Eliasson Estates combines Scandinavian integrity with deep local market knowledge. Based in the Costa del Sol, the agency offers personalised assistance for international buyers seeking transparent guidance through Spain’s legal and tax system.
Their experienced team works closely with trusted lawyers and financial advisors to ensure every purchase complies with Spanish regulations. With tailored marketing strategies, multilingual support, and a client-first philosophy, Eliasson Estates provides an exceptional buying experience from start to finish.
Whether you’re purchasing a beachfront villa or a luxury apartment, their dedicated service and proven track record make Eliasson Estates the ideal partner for a seamless property transaction.
FAQ
Do non-residents pay property tax in Spain?
Yes. Non-resident owners must pay annual IBI and Non-Resident Income Tax (IRNR), even if the property isn’t rented. Rates depend on the property’s location and cadastral value.
What is the 3% retention tax when selling property?
When a non-resident sells property, 3% of the sale price is withheld by the buyer as an advance payment towards Capital Gains Tax. The seller can reclaim any excess after filing their tax return.
How can I avoid double taxation in Spain?
Spain has treaties with many countries that prevent double taxation. A qualified tax advisor can help you file correctly and claim exemptions where applicable.
Is it mandatory to hire a Spanish lawyer when buying property?
While not legally required, it is highly recommended. A lawyer ensures the property is free from debts, checks contracts, and represents your best interests throughout the purchase.
Conclusion
Buying property in Spain is an exciting step, but understanding Spanish property taxes and legal requirements is essential to safeguard your investment. From purchase taxes to inheritance planning, knowing your obligations ensures a smooth and compliant buying process. Contact Eliasson Estates today to help you turn your dream of owning property in Spain into reality.