Buying Guide · 7 min read

Spain's 100% Foreign Buyer Property Tax: Complete Guide for International Investors

13 June 2025 · Hansson & Hertzell

Spain's government proposed a 100% tax on property purchases by non-EU residents. Here is what it means, who it affects, the current status, and what buyers should know.

Every year, thousands of foreign buyers purchase property in Spain without a clear picture of the total tax cost — and then face unpleasant surprises on completion day or, worse, years later when Hacienda comes looking for unfiled declarations. This guide is the complete picture: every tax you pay when buying, every tax you pay while owning, and everything you need to know about selling.

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Part 1: Taxes When You Buy

The tax you pay at purchase depends entirely on whether you're buying a new-build from a developer or a resale property from a private seller.

New-Build: IVA + AJD

IVA (Spanish VAT): 10% of the purchase price. On a €250,000 property, that's €25,000. No negotiation — it's a national tax.

AJD (Actos Jurídicos Documentados — Stamp Duty): Levied on the notary deed. In the Valencian Community (covering the entire Costa Blanca): 1.0% for properties under €400,000; 1.5% for properties over €400,000.

Total at purchase (new-build): 11% for properties under €400,000; 11.5% above.

Resale: ITP

ITP (Impuesto de Transmisiones Patrimoniales — Transfer Tax): Applied to all resale purchases in place of IVA. Progressive rates in the Valencian Community:

| Purchase Price | ITP Rate | |---------------|----------| | Up to €400,000 | 10% | | €400,001 – €1,000,000 | 11% | | Over €1,000,000 | 12% |

Reduced rates available for: buyers under 35 purchasing primary residence (8%), buyers with recognised disability 33%+ (8%), families with 3+ dependent children buying primary residence (8%).

Other Acquisition Costs

Beyond the headline transaction tax, budget for: notary fees (€800–€1,500), Land Registry fees (€400–€800), property lawyer (~1% + IVA, min €1,500), gestor (€300–€600), and NIE application (€10–€300 depending on method).

Total acquisition cost including all taxes and fees: typically 12–14% above the purchase price.

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Part 2: Taxes You Pay Every Year as an Owner

IBI (Impuesto sobre Bienes Inmuebles)

The annual property tax — Spain's equivalent of council tax. Based on the valor catastral (cadastral value) of the property, which is typically 30–60% of market value. Tax rate set by each municipality: typically 0.4–1.1% of cadastral value.

Annual cost on a typical €200,000 property: approximately €300–€600/year. Billed by the Town Hall in autumn, usually September–November.

IRNR — Non-Resident Imputed Income Tax

This is the tax that catches almost every foreign buyer by surprise. If you are not a Spanish tax resident and you own property in Spain, you must file an annual non-resident income tax declaration and pay tax on imputed (notional) income — even if you earn no rental income at all.

Spain assumes you derive a personal benefit from owning property in Spain and taxes you on this notional benefit:

• Properties with cadastral values updated since 1994: taxable base = 1.1% of cadastral value
• Older cadastral values: taxable base = 2.0% of cadastral value

Tax rate on this imputed income:

• EU/EEA residents: 19%
• Non-EU residents (UK, US, Australia, etc.): 24%

Example calculation: Property cadastral value: €65,000 (market value perhaps €200,000) Imputed income: €65,000 × 1.1% = €715 EU buyer tax: 19% × €715 = €136/year UK buyer tax: 24% × €715 = €172/year

This declaration is filed via Modelo 210, due by 31 December for the prior calendar year. Non-filing results in automatic fines (starting at €200) plus interest that accumulate annually until discovered — often when the owner tries to sell.

Community Fees

Not a tax, but a mandatory recurring cost for properties within a community of owners. Covers maintenance of shared areas, pool, gardens, lifts, and communal utilities. Ranges from €50–€350/month depending on the community's facilities and quality.

Garbage Collection (Tasa de Basura)

Municipal waste collection charge: €80–€200/year, often included with the IBI bill.

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Part 3: Rental Income Tax

If you rent out your Spanish property, you have additional tax obligations.

EU/EEA Residents

You can deduct allowable expenses from rental income before applying tax:

• Mortgage interest
• Property management fees
• Maintenance and repairs
• Depreciation (3% of construction value annually — this is often the largest deduction)
• Insurance premiums
• IBI
• Community fees
• Utilities (when you pay them)

Tax rate on net income: 19%

Declarations: quarterly Modelo 210 (April, July, October, January).

Non-EU Residents (UK, US, etc.)

Pay 24% on gross rental income — no expense deductions allowed. This is a significant structural disadvantage.

Comparison on €12,000 gross rental income:

• EU buyer with €5,500 deductible expenses: pays 19% × €6,500 = €1,235
• UK buyer with same income: pays 24% × €12,000 = €2,880

This difference should inform both your investment decision and your consideration of whether to pursue Spanish tax residency or a visa that reduces your IRNR exposure.

Holiday Rental Registration Requirements

For short-term tourist rentals (under 31 days), you also need:

• A tourist rental licence from the Valencian Government
• Quarterly Modelo 179 informational declarations (if receiving more than €1,000 in rental income)
• VAT registration is not required for private individuals renting residential property to private tourists — but is required if you're providing hotel-like services. This distinction matters and your gestor should confirm your specific situation.

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Part 4: Capital Gains Tax When You Sell

The Basic Calculation

Capital gain = Sale price − Purchase price − Allowable costs

Allowable costs that reduce your taxable gain:

• ITP or IVA paid at purchase
• Notary and registry fees at purchase
• Legal fees at purchase
• Verifiable improvement costs (with receipts — kitchens, bathrooms, extensions)
• Estate agent commission at sale (typically 3–5% of sale price)

Tax Rates

• EU/EEA residents: 19% on capital gains
• Non-EU residents: 24% on capital gains

The 3% Withholding Mechanism

When a non-resident sells Spanish property, the buyer is legally required to withhold 3% of the total sale price (not the gain — the sale price) and pay it directly to Hacienda. This protects Hacienda's ability to collect CGT from a seller who may subsequently leave Spain.

This 3% is credited against your actual CGT liability. If your real CGT is less than 3% of the sale price (e.g., if there's been little price appreciation or you have significant deductible costs), you can claim a refund via Modelo 210 within 4 months of the sale date.

Example: Sale price: €250,000 Original purchase price: €180,000 (including acquisition taxes) Net gain: €70,000 CGT at 24%: €16,800 3% withheld by buyer: €7,500 (3% of €250,000) Additional CGT due: €16,800 − €7,500 = €9,300 payable by seller

Plusvalía Municipal

A separate local tax on the increase in the cadastral land value during your period of ownership. Paid by the seller. Following 2021 reforms, this is now calculated proportionally to the actual gain rather than the old formula (which could result in tax even when there was no real profit). In practice, plusvalía on a property held 5–10 years in a Costa Blanca location is typically €1,500–€8,000 depending on land value and holding period.

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Part 5: Inheritance and Succession

Spanish inheritance tax (Impuesto de Sucesiones y Donaciones) applies to Spanish-located assets inherited by non-resident heirs. The Valencian Community applies national scale rates without the generous reductions available in regions like Madrid or Andalucía.

Tax rates are progressive, reaching 34% on larger inheritances. The personal allowance for a non-resident heir with no special relationship to the deceased is minimal.

What to do: Take legal advice on succession planning when you purchase, not when you're ill. Options include lifetime gifting (with gift tax implications), tenancy-in-common structures, or holding through certain legal arrangements. Each has trade-offs and requires specialist advice. The critical point is timing — options narrow as health deteriorates.

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Your Annual Tax Calendar as a Non-Resident Property Owner

| Month | Obligation | |-------|-----------| | January | Q4 rental income declaration (Modelo 210) if renting | | April | Q1 rental income declaration (Modelo 210) if renting | | July | Q2 rental income declaration (Modelo 210) if renting | | October | Q3 rental income declaration (Modelo 210) if renting | | September–November | Pay IBI direct debit (set up at your bank) | | December 31 | Annual imputed income declaration (Modelo 210) if not renting |

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Frequently Asked Questions

Do I need to file Spanish taxes even if I don't rent my property? Yes. Non-resident property owners must file an annual Modelo 210 declaration for imputed income by 31 December each year, even if the property generates no rental income.

What happens if I miss several years of IRNR filings? Hacienda can assess unpaid taxes for up to 4 years back (their general statute of limitations). Unpaid tax plus 25% surcharge plus interest accrues. When you go to sell, these debts appear and must be cleared before the transaction can complete. We regularly see buyers discover 5–10 years of unfiled IRNR at the point of sale.

Is there any way for non-EU buyers to get expense deductions on rental income? Not under IRNR as currently structured. The only route to deductible expenses is becoming a Spanish tax resident — which requires spending 183+ days per year in Spain or having your principal economic interests in Spain.

Can I claim Spanish taxes against my home country tax liability? Usually yes, partially or fully, depending on your country's double taxation treaty (DTT) with Spain. UK, Sweden, Germany, Netherlands, and France all have active DTTs with Spain. Your home country accountant should review what credits apply.

Should I use a gestor or can I file myself? A gestor (Spanish administrative professional) typically charges €150–€300 to prepare and file your annual Modelo 210 declarations. Given the consequences of errors or non-filing, this is one of the better-value professional services available to foreign property owners in Spain.

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Getting Your Tax Position Right from Day One

The ideal time to understand your Spanish tax obligations is before you buy, not after. At Hansson & Hertzell, we work with trusted gestorías and tax advisors who specialise in foreign buyer situations — from NIE applications through the first year of ownership and beyond.

Contact us to be connected with the right professionals for your situation, or for guidance on any stage of the buying process.

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Setting Up Your Tax Compliance From Day One

The single most effective thing you can do when buying Spanish property is engage a local gestor from the start. A good gestor costs €500–€1,000/year to manage your annual filings (IRNR declaration, IBI setup, rental income declarations if applicable) and that investment prevents the much larger costs of late filing fines, interest, and the complications that arise when selling a property with a backlog of unpaid taxes.

At Hansson & Hertzell, we can recommend experienced gestorías that work regularly with English, Swedish, Dutch, and German-speaking property owners across the Costa Blanca. These are professionals who understand the typical situation of a Northern European owner who spends winters in Spain, rents in summer, and wants clean tax compliance without the complexity of navigating Spanish bureaucracy solo.

Getting this right from day one — NIE in hand, gestor instructed, first IRNR declaration filed on time — sets up your ownership for the long term without the stress of catching up later.