Spain remains one of Europe's most popular destinations for buying holiday homes, retirement properties, and investment real estate. Every year, thousands of international buyers purchase apartments and villas on the Costa del Sol, Costa Blanca, Balearic Islands, Canary Islands, and throughout mainland Spain.
However, many foreign buyers are surprised to discover that owning property in Spain comes with several different taxes—not just when buying, but also every year you own the property and when you eventually sell it. Understanding these taxes before purchasing can help you avoid unexpected costs, penalties, and unnecessary stress.
This guide explains the main Spanish property taxes every foreign owner should know.
Taxes When Buying Property in Spain
The taxes you pay when buying depend on whether the property is a resale home or a newly built property.
1. Property Transfer Tax (ITP)
If you buy a resale property from a private seller, you'll normally pay Property Transfer Tax (ITP).
The exact rate depends on the autonomous region where the property is located. For example, Andalusia currently applies a general rate of 7% for many residential purchases, while other regions have different rates.
You pay ITP when buying:
Apartments
Villas
Townhouses
Most second-hand properties
2. VAT (IVA)
If you purchase a brand-new property directly from a developer, you generally pay:
10% VAT (IVA)
Plus Stamp Duty (AJD)
VAT replaces ITP for new-build purchases.
3. Stamp Duty (AJD)
AJD (Actos Jurídicos Documentados) is payable on most new-build purchases and certain mortgage deeds.
The percentage varies depending on the autonomous community.
Annual Property Taxes in Spain
Owning property in Spain usually means paying several annual taxes.
1. IBI (Local Property Tax)
IBI (Impuesto sobre Bienes Inmuebles) is similar to council tax in many other countries.
Every property owner pays IBI regardless of nationality or residency.
The tax is collected by the local town hall and is based on the property's cadastral value (Valor Catastral), not its market value.
2. Non-Resident Property Tax (Modelo 210)
One of the biggest surprises for foreign owners is that non-residents often have to file a tax return even if they never rent out their property.
Spain assumes that privately used holiday homes generate a theoretical benefit called "imputed income."
This tax is declared using Modelo 210.
If your property is NOT rented
You may need to pay tax based on:
The cadastral value
Whether the cadastral value has been revised
Your country of tax residence
If your property IS rented
Rental income must also be declared using Modelo 210.
EU and EEA residents may generally deduct qualifying expenses, while the rules for owners resident outside the EU/EEA differ and continue to evolve following court decisions.
Wealth Tax
Some foreign owners may also be liable for Spanish Wealth Tax.
Whether you pay depends on:
Your tax residency
The value of your Spanish assets
Regional rules and exemptions
Many owners never pay Wealth Tax, but high-value property owners should obtain professional advice.
Taxes When Selling Property
When you eventually sell your Spanish property, several taxes may apply.
Capital Gains Tax
Capital Gains Tax is charged on the profit made from the sale.
The taxable gain generally takes into account:
Purchase price
Selling price
Certain acquisition and selling costs
Eligible improvements
The exact tax depends on your residency status and individual circumstances.
3% Retention for Non-Residents
If the seller is a non-resident, the buyer is generally required to withhold 3% of the purchase price and pay it directly to the Spanish Tax Agency as an advance payment toward the seller's Capital Gains Tax liability. The seller later files the relevant tax return to calculate the final amount due or claim a refund if applicable.
Plusvalía Municipal
Plusvalía Municipal is a local municipal tax based on the increase in the cadastral value of the land.
In most property sales, this tax is paid by the seller unless the parties agree otherwise or specific legal exceptions apply.
What Is Modelo 210?
Modelo 210 is the tax return used by non-residents to declare:
Imputed income
Rental income
Capital gains after selling property
Missing deadlines can result in penalties and interest, making timely filing important.
Other Property-Related Costs
Foreign property owners should also budget for:
Community fees
Home insurance
Utility bills
Rubbish collection charges (where applicable)
Property maintenance
Legal and accounting costs
Although these are not taxes, they form part of the ongoing cost of owning property in Spain.
Common Mistakes Foreign Owners Make
Many international owners unknowingly make costly mistakes, including:
Assuming no tax is due because the property is not rented
Forgetting to submit Modelo 210
Missing filing deadlines
Not keeping records of deductible expenses
Assuming taxes are the same throughout Spain
Failing to plan for Capital Gains Tax before selling
Understanding your obligations early can save significant time and money.
How EasySpanishTax Can Help
At EasySpanishTax, we specialise in helping foreign property owners stay fully compliant with Spanish tax regulations.
Our online service makes it easy to:
File Modelo 210 online
Calculate your non-resident property tax
Submit rental income declarations
Declare capital gains after selling
Receive professional support in English
Avoid costly penalties and filing mistakes
Whether you own a holiday apartment, an investment property, or a villa in Spain, we're here to simplify your Spanish tax obligations.
Frequently Asked Questions
Do I pay tax if I don't rent my property?
Yes. Most non-resident owners must declare imputed income using Modelo 210 even if the property is only used privately.
What is IBI?
IBI is the annual local property tax paid to the municipality where the property is located.
Do foreign owners pay Wealth Tax?
Only if they meet the relevant thresholds and conditions. Many owners do not have to pay it.
What happens if I miss Modelo 210?
Late filing can lead to interest and penalties from the Spanish Tax Agency.
Is Capital Gains Tax payable when I sell?
In most cases, yes. The amount depends on your circumstances and the taxable gain.
We are here to help
Buying property in Spain is an exciting investment, but understanding the country's tax system is essential for avoiding costly surprises. From purchase taxes such as ITP, IVA, and AJD to annual obligations like IBI and Modelo 210, and taxes due when selling, every stage of property ownership comes with its own rules.
By staying informed and filing your tax returns correctly and on time, you can enjoy your Spanish property with confidence while remaining fully compliant with Spanish tax law.
If you're unsure about your obligations, EasySpanishTax is here to help make Spanish property taxes simple, accurate, and stress-free.