Buying property in Spain is only half the journey. The other half begins once the keys are in your hand: owning a home isn't a one-off purchase, it's an ongoing relationship with the tax office. The good news is that the system is logical and predictable, and with sensible planning the burden can be reduced legally. This guide walks you through every tax that affects an owner, from the ones you pay every year to the ones that only appear when you sell.
1. The taxes you pay every year
Whether you live in the home full-time or leave it empty, certain charges arrive on a regular basis — usually once a year.
- IBI (council property tax) — the main municipal tax, paid by every single owner. It is based on the cadastral value of the property and the rate set by your local town hall. On the Costa del Sol, both rates and amounts vary noticeably from town to town.
- Rubbish collection fee (tasa de basura) — a small but compulsory local charge.
- Garage access fee (vado) — if you have a garage with a permanent entrance, the town hall charges an annual fee for it.
- Community fees (comunidad) — not a tax in the strict sense, but a mandatory contribution in apartment blocks and gated developments, covering cleaning, pool, lift, security and shared areas.
Worth knowing: IBI is tied to whoever owns the property on 1 January. So when you buy, it is wise to include a clause splitting that year's IBI proportionally between seller and buyer.
2. Income tax on a second home
If a property is not your main residence and is not rented out, the Spanish tax office assigns it an "imputed income" — a notional income simply for owning it. The logic is that the property could potentially generate income.
- As a rule, the base is 2% of the cadastral value.
- 1.1% if the cadastral value was revised within the last ten years.
Tax is then applied to that figure at your rate. Example: with a cadastral value of €150,000, the imputed income is €1,650 or €3,000 a year — and only that figure is taxed, not the value of the property itself. Your main residence (vivienda habitual) is completely exempt.
3. If you rent the property out
Rental income is declared in your income tax return as property capital income. The key advantage for Spanish tax residents is the ability to deduct a wide range of costs and pay tax only on the net result:
- IBI and municipal fees;
- home insurance;
- mortgage interest;
- repairs and maintenance (but not improvements);
- community fees;
- depreciation of the building.
For long-term lets used as the tenant's main home, residents can also apply a significant reduction to the net income.
4. A special case: non-residents
If you are not a Spanish tax resident, taxes are declared through Modelo 210. The rate depends directly on where you live, and the gap between EU residents and the rest is substantial.
| Situation | EU/EEA resident | Outside the EU |
|---|---|---|
| Rental income | 19% (costs deductible) | 24% (no deductions) |
| Imputed income (own use) | 19% | 24% |
| Gain on sale | 19% | 19% |
Example: a non-EU citizen earning €1,000 in rent pays €240 in tax with no deductions. An EU resident with the same €1,000 may pay considerably less by deducting costs. That is why ownership structure and tax residency are worth thinking through in advance.
5. Taxes when you sell
A sale triggers two taxes at once:
- Capital gains tax (ganancia patrimonial) — on the difference between purchase and sale price, after allowable purchase, sale and improvement costs. Residents face a progressive scale from 19% to 28%; non-residents pay a flat 19%.
- Plusvalía municipal — a municipal tax on the increase in land value over your ownership period.
When the seller is a non-resident, the buyer must withhold 3% of the sale price and pay it to the tax office as an advance. If the real tax is lower, or the sale made a loss, the excess can be reclaimed via Modelo 210.
6. Wealth tax and large estates
For higher-value assets, wealth tax (Impuesto sobre el Patrimonio) may apply. Your main home is exempt up to €300,000, and the general threshold usually starts at €700,000, though it varies by region. For very large fortunes there is also a state solidarity tax.
7. Special cases
- Inherited property — generates imputed income even if it sits empty.
- Co-ownership (proindiviso) — each co-owner declares their share.
- Usufruct — the tax is paid by the usufructuary, not the bare owner.
- A home lent free to a relative — still generates imputed income for the owner.
How to pay less — legally
Good planning genuinely lowers the bill: check that your cadastral value is correct (Catastro errors are more common than you'd think), keep every invoice for repairs and improvements for a future sale, use regional allowances, and get your residency status right. Taxes aren't a reason to avoid buying — they are part of the investment strategy.
This information is for general guidance and rates may change. Want a calculation for your situation? Get in touch — we'll help you understand it and set everything up correctly.
