13 March 2025
Spain’s Mediterranean climate and laid-back lifestyle make it a popular choice for UK buyers looking to relocate or invest in property. However, before making the move, it’s important to understand the tax implications that come with buying a home abroad.
If you’re considering purchasing property in Spain, this guide will walk you through the key taxes to be aware of – helping you navigate the process with confidence and get one step closer to securing your place in the sun.
What taxes apply to buying property in Spain?
Generally speaking, there are two stages during the property buying process when you need to think about taxes:
- When you buy a property: You’ll have to pay what are called ‘sales taxes’. Usually, these are paid in lump sums at the time you buy.1
- After you buy a property: Just like in the UK, a new property means an ongoing set of maintenance taxes. These are payable on a continuous basis.2
Understanding tax residency in Spain
It’s important to note that once you’ve bought your property in Spain, your ongoing tax considerations could change if you stay in the country long enough to be considered a Spanish tax resident. Here’s a rule to keep in mind so you know whether or not your residency status is due to change:
- The ‘183 day rule’: If you spend more than 183 days in Spain during a calendar year as a UK resident, you will be considered a Spanish resident for tax purposes.
- If your main economic interests are located in Spain: Even if you spend less than 183 days in Spain, you might still be considered a tax resident if your main economic interests, like business activities and investments, are located in Spain.3
If your residency status changes, it could have an impact on some of the taxes you are paying on an ongoing basis, as well as the taxes you would need to pay if you sold your property.
The following guide is written exclusively for UK residents and will not cover the tax implications for individuals considered to be Spanish residents under the 183 day rule. For more information, you can visit the Agencia Tributaria website, which provides more information on taxes levied on housing and other real estate for residents of Spain.
Taxes on purchasing property in Spain
The first taxes you’ll need to pay when you buy Spanish property will depend on whether it’s a resale or a new build.1
Resale properties
A ‘resale’ or ‘second-hand’ refers to a property that has been previously owned and is now being sold again. If you’re buying a resale, you won’t need to pay VAT or stamp duty, but you may need to pay some other taxes.1
Property Transfer Tax
Typically, the Property Transfer Tax (ITP) is the first and largest tax you need to pay when you buy a resale property in Spain.
The tax rate varies from 6% to 11% of the property’s value, depending on the region and the size of the property1. For example, Valencia (which includes the Costa Blanca) charges 10%, increasing to 11% on properties over €1,000,000.4
You might also be asked to file a self-assessment tax form (model 600) at the regional tax office and pay the ITP within 30 days of signing the purchase deed (escritura) – a legal document that proves ownership of a property.5
New properties
A new property or new build is a property that is being sold for the first time. Broadly speaking, there are two taxes put on new builds:
Value Added Tax on new properties
Properties being sold for the first time by a developer are subject to a version of Value Added Tax (VAT) in Spain called Impuesto sobre el Valor Añadido (IVA). So, if you’re a UK resident buying a brand-new property, you’ll need to pay the standard VAT rate of 10% for residential properties.1
Even for UK residents, these payments must be made from a Spanish bank account. If paying for an off-plan property in stages, IVA is added at each stage, not as a lump sum.1
Stamp duty
Stamp duty (Impuesto sobre Actos Jurídicos Documentados – also known as AJD) is also paid by the buyer. This smaller tax, which varies depending on the region, is between 0.5% to 1.5% of the purchase price.1
AJD is a tax on the creation of the ‘property deed’, which is a legal document created by and signed before a notary that officially transfers ownership of a property from the seller to the buyer. Therefore, it’s paid at or around the same time as the notary – a professional employed by the government to oversee the legal aspects of the purchase, meaning they don’t act on behalf of you or the seller.1
Which taxes apply to property ownership in Spain?
Once you’ve bought your dream home, it’s time to get a better understanding of the taxes you’ll need to pay on an ongoing basis.
Annual property tax
The local annual property tax (Impuesto Sobre Bienes Inmuebles – IBI), called SUMA in some regions, applies to resident and non-resident property owners in Spain. Set between 0.4% and 1.1% of the cadastral value (valor cadastral) – based on things like the property’s age, location and materials – on urban properties and 0.3% and 0.9% on rural properties, it’s generally around a third less than the market value.6
IBI must be paid during the annual payment period – in 2024, this was set from 25 July to 8 October 2024. Late payments typically incur a surcharge.7
Wealth tax
Spanish tax residents – anyone that spends more than 183 days of the calendar year there – must pay a wealth tax (impuesto de patrimonio) on their worldwide assets, while non-residents must pay the tax on their net assets in Spain, including property.8 The rate, which increases as wealth increases, varies depending on region but is generally set between 0.2% and 2.5% of overall wealth.8
A tax-free allowance of €700,000 (less in some regions) applies, and an additional €300,000 property allowance.6
Andalusia and Madrid have effectively abolished the tax by applying a 100% relief for an unspecified length of time to attract foreign investors and stimulate the property market.
Rental income tax
If you earn rental income from your Spanish property, it’s subject to income tax (Impuesto sobre la Renta de las Personas Físicas). If you’re a non-resident you must pay 24% with no deductions, while residents are charged based on their income tax band, up to 54%, with certain deductions.9
Imputed income tax
If you are a non-resident with a holiday home in Spain that you don’t rent out, you’ll still be subject to Spanish taxes on property. Known as imputed income tax (Impuesto sobre la Renta de No Residentes – IRNR), this applies because the Spanish government views your property as a potential source of income, even if it remains vacant throughout the year. The amount you’re taxed depends on the value of the property.
Because tax regulations are complex and dynamic, it’s advisable to seek certified professional tax advice when buying and owning a property in Spain.
Lumon: helping you simplify your overseas property purchase
Navigating tax obligations in Spain can be complex. Lumon specialises in helping you manage the currency side of your property purchase, ensuring your international payments align with your financial goals.
Our service is tailored to your currency requirements, providing relevant market insights and bank beating exchange rates. Your dedicated currency specialist can guide you through every step of your property purchase so you can get great value when you send money to Spain.
When you buy:
- Forward contracts: Our forward contract options allow you to fix an exchange rate before the property is purchased or secure the price of a foreign property sale. This gives you the certainty of knowing what the value will be in your desired currency when the time comes to transfer.
- Experienced personal account manager: Your experienced personal account manager will help you develop a currency strategy that empowers you to make your property purchase with confidence
- Lumon EU bank accounts: Our EU bank accounts facilitate the direct receipt of funds from foreign solicitors.
After you buy:
- Online account: Set up your online account so you can take control of your ongoing property payments and make them in minutes.
- Dedicated Lumon staff in Spain: Our dedicated Lumon staff in Spain can support and streamline your international payment arrangements with solicitors, lawyers and notary offices.
- Regular Payment Plan: Once you know the property payments that you’ll need to pay on an ongoing basis, Lumon can set up a Regular Payment Plan so you can automate recurring transactions with ease.
Contact Lumon to learn more about how we can help you manage your international payments when buying property in Spain.
FAQs
Do you have to pay property tax every year in Spain?
If you already own a property in Spain, you’ll have to pay an ongoing set of property taxes each year, just like in the UK. These ongoing taxes include annual property tax, wealth tax, rental income tax and imputed income tax.
When you first buy a property, you’ll also be required to pay a one-off set of ‘sales taxes’ which could include VAT or Property resale tax based on whether you’re purchasing a new build or resale, respectively. You’ll have to pay Land Appreciation Tax regardless of whether you buy a resale or a new build.
How can you calculate property tax in Spain?
To calculate your property tax as a UK buyer, it’s important to do your research on the taxes you’ll have to pay when you purchase your property, as well as the ongoing set of taxes you’ll need to pay as a property owner.
For extensive information on Spanish Property taxes, you should consult the Spanish Tax Agency’s resources on housing and real estate.
How do I pay my property tax in Spain?
To pay property taxes in Spain, you’ll need to ensure you have a Tax Identification Number (NIE), which is mandatory for any financial transactions in Spain.10 From there, payment can be made via Direct Debit through a Spanish bank.
At Lumon, we offer a Regular Payment Plan so that you can set up recurring transactions on a schedule that suits you and your ongoing property payments.
Is property taxed in Spain for non-residents?
Yes, as a non-resident property owner in Spain, you are subject to specific taxes related to your property. Taxes apply to your property at the point of purchase, and there is a set of ongoing property taxes once you become a property owner.
You can set up a Regular Payment Plan at Lumon to automate your monthly recurring property payments abroad.
Sources used:
1 Gobierno De Espana – Buying and selling property – Taxes
2 Agencia Tributaria – Non-resident: taxation of real estate
3 PWC – Spain, Individual, Residence
4 Generalitat Valenciana – I have bought a property
5 Agencia Tributaria – Transfer of property for valuable consideration (TPO). (Except used vehicles)
6 PWC Spain Individual – Other taxes
7 SUMA – Annual payment period
8 Agencia Tributaria – Non-residents’ wealth tax liability
9 RSM – Spain Real Estate Tax Guide 2024
10 Agencia Tributaria – Instructions, Tax Register Declaration For Registration In The Taxpayers’ Tax Register, Change Of Address And/Or Change Of Personal Details Form 030
Sources last checked on date: 13/03/2025
The information provided in this material is accurate to the best of our knowledge at the time of writing 13/03/2025, but it is subject to change. The content is for informational purposes only and does not constitute tax advice. It is essential that individuals seek advice from professional services regarding tax matters. We do not accept liability for any errors or outdated information, and individuals should not rely on the information presented without consulting an expert.
