by Plaza Estates 
Buying Spanish property involves much more than the purchase price. Between acquisition taxes, annual running costs, capital gains on sale and — for higher-value estates — the state-level wealth taxes, the real cost of ownership deserves careful planning. This guide gives an overview of the main taxes and costs a non-resident buyer should understand, with a particular eye on the premium market. It is general information, not tax advice: individual circumstances vary considerably, rates and thresholds change from year to year, and specialist advice is essential before you commit. Where figures matter to your decision, confirm the current rates, bands and deadlines with a tax adviser or the Agencia Tributaria (AEAT) for your specific case.
Purchase costs: what you pay on completion
The headline taxes differ depending on whether you are buying a resale property or a new-build from a developer.
Resale property
Transfer tax (Impuesto sobre Transmisiones Patrimoniales, ITP) is levied at 7% on resale properties in Andalucía, following the flat rate introduced by the Junta de Andalucía via Ley 5/2021. This replaced a tiered system and simplified the calculation. Reduced rates apply in specific circumstances (for example young buyers, large families or people with disabilities) — consult a lawyer to check eligibility. Note that the taxable base can be calculated on the reference value set for the property (valor de referencia) rather than simply the price paid, so an individual calculation is worthwhile before you budget.
New-build from a developer
Where the purchase is a first delivery of a new dwelling that is subject to VAT, ITP does not apply. Instead you pay VAT (IVA) at 10% plus stamp duty (Actos Jurídicos Documentados, AJD) of approximately 1.2% in Andalucía. IVA applies because the transaction is a first delivery subject to the tax — not simply because the seller is a developer — and reduced IVA rates may apply for certain protected categories. Your lawyer will confirm which regime applies to your purchase.
Additional buying costs
On top of the headline tax, budget for notary and land registry fees, which are set by official regulated scales that vary with the deed, the value and the complexity of the transaction, and for independent legal representation. Legal fees are often quoted around 1% plus VAT as a rough guide, but they vary by firm and scope — ask for a written quote listing the services and taxes included. A survey is optional but advisable for older properties.
Keep purchase costs separate from mortgage costs if you are financing. Under current rules the lender generally assumes the notary, land registry, administrative (gestoría) and loan-tax costs associated with setting up the mortgage, while the borrower typically pays for the property valuation (tasación). As a broad rule of thumb, additional acquisition costs tend to come to around 10% on a resale purchase and roughly 12–13% on a new-build, though the actual total varies by property and circumstances.
| Cost | Resale | New-build | Notes |
|---|---|---|---|
| Transfer tax (ITP) | 7% | — | Ley 5/2021, Junta de Andalucía; base may use the valor de referencia |
| VAT (IVA) | — | 10% | First delivery of a new dwelling subject to IVA |
| Stamp duty (AJD) | — | ~1.2% | Andalucía rate |
| Notary fees | Regulated scale | Official tariff — varies by deed, value and complexity | |
| Land registry | Regulated scale | Official tariff for registering the new title | |
| Legal fees | By quotation | Independent solicitor; request a written quote | |
| Total additional costs | ~10% | ~12–13% | Approximate; varies by case |
Annual ownership costs
Once you own the property, several recurring obligations arise each year — some mandatory, others variable.
IBI (property rates)
Impuesto sobre Bienes Inmuebles (IBI) is an annual municipal tax, broadly comparable to a local property rate, set by each town hall and calculated on the property’s valor catastral (a government-assessed value that is often below market value, though this is not guaranteed). Because both the assessed value and the municipal rate vary from one town to another, the bill differs by location; your lawyer or gestor can tell you the actual figure for a specific property before you buy.
Imputed income tax for non-residents
A frequently overlooked obligation: if you are a non-resident and own a Spanish property that is not rented out and is not your primary residence, you are taxed on a notional (imputed) rental income. This is calculated on the valor catastral according to the rules in force, with the applicable percentage depending on the property’s cadastral situation, and it is then taxed at the non-resident rate that corresponds to your circumstances. The amounts are typically modest in absolute terms, but the return must be filed in Spain. The exact percentage, rate and filing deadlines should be confirmed with the AEAT or a tax adviser for the year in question.
Community fees and other running costs
Properties within a residential community (comunidad de propietarios) are subject to community fees covering shared maintenance, communal insurance, cleaning and, where applicable, staff and security. These fees vary widely depending on the development and its facilities, so before buying you should review the community’s accounts and budget, and check for any special levies or planned works. Note that in a detached villa the upkeep of a private pool and garden is an individual expense borne by the owner, not a community charge. Buildings insurance is highly advisable, and where there is a mortgage the lender will usually require damage or fire cover; contents insurance is also worth considering. Utilities (water, electricity, internet) are additional.
Capital gains tax when you sell
IRNR for non-residents
Non-residents selling Spanish property pay capital gains tax under the Impuesto sobre la Renta de No Residentes (IRNR). The gain is broadly the sale price minus the acquisition cost, adjusted for documented improvements and eligible buying and selling costs. A flat rate applies to all non-residents on that gain, regardless of nationality — there is no higher rate for non-EU sellers on the sale of a property — so confirm the current rate with a tax adviser. Given the sums involved in the premium segment, it is worth taking specialist advice before completion to model the likely liability accurately.
The 3% withholding at completion
Where the seller is a non-resident, the buyer is required to withhold 3% of the agreed purchase price at completion and pay it directly to the Spanish Tax Agency (AEAT) on account of the seller’s capital gains liability. This is not an additional tax — it is a prepayment. The non-resident seller then declares the actual gain and, if the 3% withheld exceeds the final liability (or the sale produced a loss), can apply to reclaim the excess. The relevant declarations and their deadlines should be handled with a tax adviser, as the applicable forms and timeframes are set by the AEAT and can change.
Plusvalía municipal
Plusvalía municipal (formally Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana, IIVTNU) is a local tax levied by the municipality on the increase in the land component of the property’s value over the ownership period. Following the reform of its calculation method, the tax can generally be worked out using either an objective method (based on the cadastral land value and the years of ownership) or a real-gain method (based on the actual gain apportioned to the land), and where the property is sold at a loss that can be evidenced, no plusvalía is due. The transmission still has to be declared and the position evidenced to the town hall, and the rules and coefficients vary by municipality — so confirm how it applies with a professional rather than assuming it is calculated automatically.
Wealth taxes: what to be aware of
Spain has two relevant layers here: a wealth tax (Impuesto sobre el Patrimonio) set at regional level, and a separate state-level tax on large fortunes (Impuesto Temporal de Solidaridad de las Grandes Fortunas). These are distinct taxes that interact with one another, and the rules have changed over recent years.
Andalucía has applied a rebate (bonificación) on the regional wealth tax, the practical scope of which has varied over time and in coordination with the state-level tax on large fortunes. Because of that interaction, the position for a higher-value estate is not something to assume from general statements — it needs an individual calculation.
For non-residents, these wealth taxes fall on assets located in Spain rather than on worldwide wealth. Two points are worth flagging. First, there can be a formal obligation to file a wealth declaration once the value of your Spanish assets passes the relevant threshold, even in cases where no tax ultimately falls due. Second, anyone with substantial assets should obtain an individualised calculation each year from a tax adviser, because the applicable thresholds, rebates and rules can move, and the interaction between the regional and state taxes is precisely where errors happen. We do not set out specific bands or figures here for that reason — they should be confirmed for the current year and your specific circumstances.
Pros and cons
Pros
- The flat ITP rate on resale purchases in Andalucía is straightforward to understand
- Andalucía has applied a rebate on the regional wealth tax, though the position for larger estates needs individual advice
- The reformed plusvalía means no tax where a sale at a loss can be evidenced
- Annual IBI is typically modest relative to property values
- Capital gains on sale are taxed at a single flat rate for all non-residents, regardless of nationality
Cons
- The 3% withholding at sale can create a cash-flow gap while any refund is processed
- The imputed income obligation catches many non-residents by surprise
- Higher-value estates can face the state tax on large fortunes even where a regional rebate applies
- Annual filing obligations in Spain are best handled through a local tax adviser or gestor
- Currency fluctuations can affect real returns when converting proceeds to sterling, dollars or other currencies
Frequently asked questions
Do I need a Spanish tax representative as a non-resident owner?
Appointing a fiscal representative in Spain can be required in certain cases and is often advisable in practice, but it is not a universal obligation for every non-resident. Whether it is mandatory in your situation depends on your circumstances, so it is worth checking. In any event, most non-resident owners find it valuable to have a local gestor or tax adviser handle annual filings, IBI payments and any correspondence from the AEAT; compliance costs are generally modest relative to the property value.
Can I deduct the cost of improvements when calculating capital gains?
Documented investments and genuine improvements can increase the acquisition value used to calculate the gain, which reduces the taxable base, while routine maintenance and repairs generally do not. Whether a particular piece of work counts as an improvement or as maintenance depends on the nature of the work and how it is documented, so keep invoices and bank records for all significant works throughout your ownership and take advice on their treatment at the point of sale.
Is there any exemption from capital gains linked to a main residence?
Spain offers reliefs connected to a habitual residence — for example, reliefs where sale proceeds are reinvested in another habitual residence, and reliefs available to older sellers — though the detailed conditions apply to tax residents. Importantly, certain EU and EEA non-residents may, under conditions, access the reinvestment exemption when selling a former habitual residence in Spain, so it is not accurate to say non-residents never benefit from any relief. The precise conditions and time limits are specific and change, so confirm your eligibility with a tax adviser before relying on any exemption.
How does the plusvalía work if the property was purchased during a downturn?
Since the reform of the calculation, sellers can generally elect the real-gain method, which is more favourable where actual land appreciation has been low or negative, and where the property is sold at a loss that can be evidenced, no plusvalía is payable. The municipality still sets the applicable rules for its area, but the reformed method means buyers who purchased at high prices or held through a correction are not automatically taxed on a notional gain that did not occur. Because the position is declared and evidenced case by case, confirm how it applies with a professional.
What are the tax implications of renting the property?
Non-residents who rent out their Spanish property must declare the rental income in Spain under the IRNR regime. As a general framework, EU and EEA residents can deduct allowable expenses (proportional to the rented period) and are taxed on the net figure, while other non-residents are generally taxed on the gross income. The filing regime and deadlines have changed in recent years, so the current rules, rates and timing should be confirmed each year with the AEAT or a tax adviser rather than assumed. Rental income is declared separately from the imputed income that applies to periods when the property is not let.
This article is general information about the main taxes and costs of owning property in Spain, not tax advice — individual circumstances vary and rules change. Plaza Estates works alongside independent legal and tax advisers who provide tailored guidance for each buyer’s situation; we can introduce you to specialists and help you plan your purchase. Browse our listings at plazaestates.es
Plaza Estates · +34 952 524 191 · [email protected]
