Guide to Property Taxes in Spain

Nonresident foreigners are liable to tax on their Spanish-sourced income. Nonresident couples may file their income tax returns jointly or separately.

For married couples married under the community property regime, their incomes, capital gains, and related deductions are divided equally between them, whether they file jointly or separately. For married couples married under the separate property regime, their incomes, capital gains, and related deductions are attributed exclusively to each individual earning the income.

Income Tax (IRPF)

Income is categorized into the following basic categories:

  1. Employment income
  2. Income from movable capital
  3. Income from immovable capital
  4. Business income
  5. Capital gains
  6. Imputed income (such as income from residences, other than the taxpayer´s primary residence)

Income earned by nonresidents is generally taxed at a flat rate of 24%; however, the rate is 19% for all EU and EEA residents if there is an effective exchange of tax information.

Rental Income Tax

Income from properties is categorized as investment income in Spanish tax laws. Nonresident foreigners (EU/EEA) earning rental income are taxed at a 19% flat rate on the gross income for 2022 and 2023, withheld by the tenant. Income-generating expenses are deductible if you are an EU/EEA resident.

Imputed Income Tax

Nonresident foreigners have to pay a 2% tax levied on the cadastral value of any unrented Spanish urban property. If a new property value was set after January 1, 1994, the applicable imputed income tax rate is 1.1%.

Local Income Tax/Income Tax Surcharge

In addition, nonresidents must pay an annual registration fee to the Chamber of Commerce, Industry, and Navigation. The surcharge is levied at progressive rates from 0.75% (for income up to €60,101.21) to 0.01% (for income over €24,040,484.18). The surcharge is deductible for income tax purposes.

Corporate Tax

Income and capital gains earned by companies are taxed at a flat rate of 25%. Income-generating expenses are deductible when calculating taxable income. Rental income received by corporations is considered business income and is subject to the corporate tax rate of 25%.

Capital Gains Tax

Capital Gains Tax (Impuesto de Plusvalia)

Nonresidents selling their Spanish property have to pay capital gains tax. The capital gain or loss on property sale is computed as the transfer price less acquisition cost (acquisition price and related expenses) and less appropriate minimum depreciation. The acquisition cost is indexed by applying a coefficient published annually by the Budgetary Laws, based on the year of acquisition.

Capital gains derived by nonresidents are taxed at a flat rate of 19%.

For properties acquired before December 31, 1994, but later than December 31, 1986, inflation relief is given. The gain is then reduced by 11.1% for each year or part of a year the property was owned before December 31, 1994.

Three percent (3%) of the capital gains must be withheld and paid by the buyer to the Spanish tax authorities. However, the buyer of Spanish property from nonresidents need not withhold 3% of the capital gains if the nonresidents have owned the property before December 31, 1996, without improving it for more than 10 years (as indicated in the notarized deed of sale), or the property was contributed to the capital of a Spanish company.

Urban Land Appreciation Tax (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana, IIVTU)

Nonresidents have to pay this tax on the increase in the value of urban land when they sell it. The taxable base is the cadastral value of the land at the date of disposal multiplied by a certain percentage, calculated as the number of years the land was held (maximum of 20 years) multiplied by a coefficient from 3 to 3.7. The rate is set by each municipality and may be up to 30%. If they instead decide to give it as a gift or inheritance, their beneficiary has to pay this tax.

Property Buying Costs and Taxes in Spain

Description Cost Range Who Pays
Property Transfer Tax 6.00% - 11.00% Buyer
Agent Fee Buyer - Buyer
Agent Fee Seller 3.00% - 6.00% Seller
Legal Fees 1.00% - 2.00% Buyer
Notary Fees 0.50% - 1.00% Buyer
Roundtrip Cost 10.50% - 20.00%  
Source: Global Property Guide, PWC, Deloitte

Property Holding Tax

Net Wealth Tax (Impuesto sobre el Patrimonio, IP)

In all autonomous regions except Guipuzcoa, which is a province of the Basque Country, the net wealth tax has been abolished as of January 1, 2008. Technically, the tax law has not been abolished, but there is a 100% tax allowance, and taxpayers are not required to file tax returns on net wealth.

From 2015 to 2016, the net wealth tax has been reactivated. Resident individuals are subject to net wealth tax, which is levied on their worldwide assets. The net wealth tax rates range from 0.20% to 3.50%. In Andalucia, the net wealth tax rates range from 0.24% to 3.03%.

Net Wealth Tax Rates

Tax Base, € Tax Rate
Up to €167,129 0.20%
€167,129 - €334,253 0.30%
€334,253 - €668,500 0.50%
€668,500 - €1,336,999 0.90%
€1,336,999 - €2,673,999 1.30%
€2,673,999 - €5,347,998 1.70%
€5,347,998 - €10,695,996 2.10%
Over €10,695,996 3.50%
Source: Global Property Guide, PWC

The taxable base is net wealth, calculated as all Spanish assets less all documented liabilities (excluding exempt assets). The liabilities are valued according to their normal value on December 31 and are deductible only if they are adequately substantiated.

The property is valued at whichever is highest among:

  • The cadastral value
  • The value determined by the tax administration for other taxes
  • The actual acquisition price

Unlike resident Spanish property owners, nonresidents’ combined amount of IRPF (income tax) and IP (wealth tax) due may exceed 60% (i.e., it has no limit). The net wealth tax is not a deductible expense for income tax purposes, although it can be considered a documented liability.

Real Estate Tax (Impuesto sobre Bienes Inmuebles, IBI)

The taxable base is the cadastral value, which is adjusted every eight years concerning the property’s market value. The tax rates may be increased by the municipal authorities but are generally 0.4% for urban properties and 0.3% for rural properties. Property owners are generally liable for this tax, but it may be charged to the tenant if so agreed in the contract, which is commonly done. Real estate taxes are deductible for income tax purposes.

Special Tax on Real Estate

Generally, a 3% tax is levied annually on the cadastral value of real estate owned by nonresidents.

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