07.01.2025 
The purchase of property in Spain attracts many investors and buyers due to the favorable climate, high quality of life and variety of offers. However, along with the benefits come tax obligations that must be considered when acquiring and owning property. In this article we will examine in which regions of Spain the property taxes are the highest and how the tax burden can be minimized.
Taxes on purchasing property in Spain
In the primary market
The purchase of property in the primary market includes several key taxes:
- Value Added Tax (IVA) — 10% of the cadastral value of the dwelling and 21% for commercial properties or plots of land. In the Canary Islands, instead of IVA the IGIC (Impuesto General Indirecto Canario) tax of 4.5% is applied.
- Stamp Duty (AJD) — varies from 0.5% to 1.5% of the purchase price depending on the region.
In the secondary market
When purchasing property on the secondary market, the buyer pays the property transfer tax (ITP - Impuesto de Transmisiones Patrimoniales). The tax rate depends on the autonomous community and may range from 6% to 11%.
- Catalonia — 10%
- Madrid — 6%
- Asturias — 8-10%
Taxes on selling property
Capital Gains Tax (CGT)
When selling property, the difference between the purchase price and the sale price is subject to Capital Gains Tax (CGT - Capital Gains Tax) with progressive rates:
- up to 6 000 € — 19%
- from 6 001 to 50 000 € — 21%
- over 50 001 € — 23%
Non-residents in Spain pay a fixed rate of 19% on the capital gain (for residents of the EU, Iceland and Norway) or 24% (for other non-residents).
Land Value Increase Tax
This tax is calculated based on the increase in the value of the plot of land and can reach up to 30% of the increase in value. The tax amount is determined by the municipality and depends on various factors, such as location and length of ownership.
Property ownership taxes
Annual Property Tax (IBI)
IBI (Impuesto Sobre Bienes Inmuebles) is the main property tax that all owners pay. Rates range from 0.4% to 1.1% of the cadastral value depending on the municipality.
Rental Income Tax for Non-Residents (IRNR)
Non-residents who rent out property are required to pay the IRNR (Impuesto sobre la Renta de no Residentes) at a rate of 19% (for residents of the EU, Iceland and Norway) or 24% (for other non-residents) on the profit after expenses are deducted. If the property is not rented out, the tax is applied at 1.1% of the cadastral value.
Luxury Tax (Impuesto sobre el Patrimonio)
This tax applies to owners of property valued at over 700 000 €. Rates vary from 0.2% to 3.75% depending on the region. In some autonomous communities, such as Valencia, the threshold for paying the tax is lowered to 500 000 €.
Additional costs
- Community fees — depend on the region and the characteristics of the property.
- Garbage disposal — a fixed or variable amount depending on the municipality.
- Property insurance — mandatory if there is a mortgage.
- Notary and registration fees — around 1% of the property value.
Penalties for tax evasion
Failure to pay taxes in Spain leads to fines of up to 100% of the unpaid amount, surcharges of up to 20% and possible confiscation of property. It may also result in the denial of residence permit renewals.
Tax optimization tips
- Choose regions with low tax rates, for example, Madrid or Zaragoza.
- Register the property under several family members to reduce the tax base.
- Declare your income on time and take advantage of tax deductions.
Summary
Property taxes in Spain vary depending on the region and type of transaction. It is important to study the tax legislation carefully and seek assistance from professional consultants to minimize the tax burden. The proper choice of region and sound planning can help significantly reduce expenses when buying and owning property in Spain.
