Spanish Property Taxes & Fees
***Please note that Spanish law changes frequently and the following information is in no way offered as a substitute for independent professional advice.
Taxes on purchasing a property
We recommend that you allow approximately 8% (without a mortgage) and 10% (with a mortgage), of the declared price of the property to cover fees arising from the purchase e.g. land registry fees, notary fees, legal fees and taxes. Below there is an outline of how these fees break down:
 | Transfer Tax (Impuesto sobre Transmisiones Patrimoniales) |
This tax is paid by the purchaser and is a standard 7% applied to the declared value of the property. This tax must be paid within 30 days of signing the title deed.
| Notary |
The notary, registration and handling (gestoría) fees, will together amount to approximately 1% of the purchase price. The notary charges can vary depending depending on the size of the property, its price and the number of pages in the documents.
If you are obtaining a mortgage, there will also be notary and registry fees to pay for registering the mortgage deed, although the amounts will be less, as the mortgage will be less than the value of the property. In addition, Stamp Duty is charged on mortgage deeds of around 1.8%. There will also be a valuation fee, which is usually around 0.1% of the purchase price, and there is usually a 1% application fee charged by the lender.
Annual Property Taxes
| Impuesto sobre Bienes Inmuebles – IBI (sometimes known as contribuciones) is the annual real estate tax. This is paid by residents and non-residents alike. It is based on the valor catastral, which is revised every 10 years, and updated annually in line with inflation. It is paid to the local authority for services such as refuse collection, hospitals, police, schools etc. It is a municipal tax and so can vary considerably from one area to another for the same type of property , but typically it is between 0.75% and 1% of the valor catastral |
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Impuesto sobre el Patrimonio (Wealth Tax). This is paid by both residents and non-residents – but it affects them differently: residents have an exemption of EUR108,000 each, so a property owned jointly by husband and wife is free of patrimonio up to EUR216,000. Non-residents do not benefit from this exemption. Mortgages or other debts registered against the property can be deducted from their value, whether resident or not. |
Taxes on selling a property
| Land/capital gains tax (Plus Valía) |
This is paid by the seller. This tax is calculated on the increase in the value of the land from when it was last sold. The calculation is based on the rateable value of the property and is a ‘one-off’ payment.
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Capital Gains Tax (Impuesto sobre el Incremento Patrimonial) |
When you sell the property, there is capital gains tax (CGT) to pay. Since 2007 residents and non-residents are subject to a flat rate of 18% CGT on profits from the sale of their Spanish home. Residents and non-residents both have two allowances they can claim:
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there is an annual allowance available to adjust the original purchase price to allow for inflation – so for example, if you bought the property in 1996 and sold it in 2000 you are allowed to inflate the purchase price by this coeficiente de actualización (inflation factor) – which in this case is 1.08;
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expenses of purchase, including transfer tax or VAT, plusvalía, and the notary, lawyer, registration and other fees.
Residents have three other allowances not available to non-residents, which mean that they can avoid CGT, and at worst will only pay 20%:
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most importantly, if a resident is aged over 65, he is exempt from CGT completely;
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the proceeds of the sale of a principal residence are also usually exempt from tax if they are used to purchase another main home;
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the maximum rate of tax is 20% if the gain has been generated over more than 2 years. A resident has his capital gain added to his income and taxed at his marginal rate. Normally, this starts at 15% and rises to 40% - but tax on the gain (if earned over more than 2 years) is limited to a maximum of 20%.
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Impuesto sobre la Renta de no residentes |
If the vendor is non-resident, the buyer is required to deduct a 3% withholding tax from the amount paid for the property, and deposit this with the Tax Office (Hacienda). Generally, this is more or less a similar amount to the amount of the vendor’s 18% capital gains tax liability, and so it either forces the non-resident vendor to declare for CGT, in order to obtain any repayment due, or the retention paid is regarded as covering his capital gains tax liability.
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Impuesto sobre la Renta (Property Owners’ Imputed Income Tax). This tax is paid by residents on a second property and non-residents on any property owned in Spain, other than land in the country, urban plots and property used commercially. It imputes 2% of the valor catastral to property owners as a notional income - this is reduced to 1.1% if the valor catastral has been revised since 1994. For residents, this notional income is added to their normal income and taxed at their particular income tax rates. Non-residents are taxed at a flat rate of 25%. For non-residents therefore, this tax is equivalent to 0.5% of the valor catastral, (reduced to 0.275% if the valor catastral has been revised since 1994). Again, the income would be taxed according to the regimen económico. |
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