Spanish Property Taxes: What Brits Need to Know

Buying your dream place in Spain? Good. Now let’s talk about the bit that no one dreams about: the taxes. Spain has a very… let’s call it thorough tax system when it comes to property purchases. Brits moving over are often caught off-guard because it’s quite different from the UK system.

Here’s your clear, practical guide — no sugar-coating, but no panic either.

First: The Upfront Purchase Taxes

When you buy property in Spain, you face one of two main taxes depending on what you’re buying:

1. Transfer Tax (Impuesto de Transmisiones Patrimoniales, ITP) — for Resale Properties

• This applies if you’re buying a second-hand property.
• The tax rate varies by region.
• In most parts of Spain, expect 6% to 10% of the purchase price.
• Example: In Valencia (2025), the ITP is generally 10%.

2. VAT (IVA) + Stamp Duty (AJD) — for New Builds

• New properties from developers come with 10% IVA (VAT).
• On top of that, there’s stamp duty (AJD) — between 0.5% and 1.5%, depending on the region.
• So if you’re buying a €300,000 new-build, expect to pay roughly €30,000 IVA + €3,000 to €4,500 AJD.

Important:
You don’t pay both ITP and IVA — it’s one or the other depending on whether it’s resale or new.

The Hidden Costs Brits Often Forget

• Notary fees
• Land Registry fees
• Legal fees
• Mortgage arrangement fees (if applicable)

Altogether, expect purchase costs to total around 12% to 15% of the property price once everything’s added up.

After You Own: Annual Property Taxes

Spain doesn’t stop taxing you after purchase. Once you own, these apply:

1. IBI (Impuesto sobre Bienes Inmuebles)

• Roughly equivalent to UK council tax, but usually cheaper.
• Based on the cadastral value (often much lower than market value).
• For a typical property, expect €300 to €800 per year depending on location.

2. Basura (Waste Collection Tax)

• Small additional local tax for bin collection.
• Often €100–€200 annually.

3. Non-Resident Income Tax (if applicable)

• Brits who own but don’t live full-time in Spain are liable.
• Even if you don’t rent out, Spain taxes your property’s “deemed rental value.”
• The taxable base is usually 1.1%–2% of cadastral value, taxed at 24% for non-EU residents (UK included post-Brexit).
• This one always surprises British buyers.

4. Rental Income Tax (if rented)

• Non-residents renting out property are taxed on actual rental income.
• For UK citizens post-Brexit: 24% flat rate, with no deductions allowed.
• Tax returns must be filed quarterly.

Capital Gains Tax (When You Sell)

• Non-residents selling property pay capital gains tax on profits.
• 2025 rates:
  • 19% on first €6,000
  • 21% from €6,000 to €50,000
  • 23% on €50,000 to €200,000
  • 27% on amounts over €200,000
• The buyer must withhold 3% of the sales price and pay it directly to the tax office — essentially a prepayment towards your liability.

Wealth Tax (Impuesto sobre el Patrimonio)

• Applies if your worldwide assets exceed certain thresholds.
• In some regions (like Madrid), this tax has been heavily discounted or eliminated.
• Other regions (e.g. Valencia, Andalucía) still apply it.
• For most ordinary buyers under €1 million total wealth, it’s usually not a major issue — but high-net-worth buyers should get advice.

Inheritance Tax

• Complex and regionally varied.
• Unlike the UK, Spain doesn’t have automatic spouse exemptions unless you’re resident.
• Exemptions are far better for residents than non-residents.
• Anyone planning long-term ownership should review this carefully with a tax lawyer.

Bottom Line Summary Table

Don’t DIY This

Spanish property taxation is highly regional and constantly evolving. Get a qualified tax lawyer and gestor involved from the start. They will save you more money than they cost.