What You Need to Know About Second Property Tax in Spain

Buying a second home in Spain can be exciting, but the tax implications of owning a second home in Spain are often more complex than many expect. Second home in Spain tax rules can vary based on how the property is used, where it’s located, and whether you are a resident or not. Some properties are taxed each year, even without rental income, while others may qualify for deductions or face local surcharges (additional charges). Tax on second home in Spain can also differ depending on the region, affecting how much you pay when buying, owning, or passing on the property. Careful planning can help reduce what you owe, especially through legal ownership structures or by avoiding double taxation as a non-resident.

How Spain Taxes Multiple Properties and Second Homes

In Spain, a second home is any property you own that is not your main residence and is not used for business purposes. This means you do not live there permanently or meet the conditions of a “vivienda habitual.” A property becomes your main residence only if you live in it continuously for at least three years, or move in within a year of buying it for personal reasons like marriage or job relocation. Any other property you own is treated as a second home, and this matters for taxes. Spanish second home tax rules apply differently, often involving yearly income imputations based on the property’s cadastral value.

Your main residence is treated more favorably than your other properties. It gets tax exemptions and may even allow mortgage deductions if you bought it before 2013. On the other hand, second homes are not eligible for these benefits. Instead, you must declare them and pay tax on second property in Spain as imputed rental income, even if no one lives there. Owning two homes in Spain taxes you differently depending on usage, and both types of homes are subject to local property taxes, though rates and rules can vary.

Taxes on multiple properties in Spain can add up quickly if you don’t plan carefully, especially since these taxes are influenced by property use, region, and ownership status. Spanish property tax for foreigners can also differ from what residents pay, particularly in how deductions and income imputations are handled. Your residency status plays a key role. If you are a tax resident in Spain, you must report your second home in your yearly income tax and pay based on its value.

However, if you are a non-resident, Spain property tax for non-residents is applied under a different system and flat rate, which varies depending on your country of origin. Renting out the home introduces yet another layer, as rental income is taxable, though some expenses may be deductible. Therefore, it’s essential to understand how living in Spain can impact the amount of tax you owe.

What Extra Taxes Apply to Second Homes in Spain

Owning more than one property in Spain can bring extra costs that go beyond just buying the home. For properties, taxation in Spain includes yearly taxes and one-time fees that can add up fast. Many of these charges depend on where the property is located, how you use it, and whether you live in Spain full-time. Understanding these taxes and the Spain property tax rules for expats can help you budget better and avoid surprises.

Non-Resident Income Tax (Even Without Rental Income)

You must pay tax even if you don’t rent out your second home. As a non-resident, Spain charges you an income tax on the value of your property, not on actual rent. This is called imputed income. It’s usually 2% or 1.1% of the cadastral value, taxed at a flat rate of 24% (or 19% if you live in the EU or EEA). This tax is due each year and applies whether the home is used or not, which answers a common question: do you pay more tax on second home Spain? In many cases, the answer is yes, due to this imputed income rule.

Imputed Income Tax on Second Homes

All second homes in Spain are taxed as if they generate income. This applies to both residents and non-residents. The tax is based on a percentage of the cadastral value, not market value. It adds a regular cost just for owning the home, which is why many owners rent out the property part of the year to cover this amount. The owning multiple homes in Spain tax implications become more serious when these annual obligations stack up across properties.

IBI (Local Property Tax) Differences

IBI is a yearly local tax based on the cadastral value of your property. Rates vary by town, usually between 0.4% and 1.3%. Second homes can lose some discounts that first homes get, and some towns add extra charges for owning multiple properties. These multiple property tax Spain surcharges can significantly raise your annual bill depending on the region. Because of this, two homes in different cities can have very different IBI bills.

Wealth Tax for Multiple Properties

Spain taxes personal wealth if your net assets are over €700,000 (plus a €300,000 allowance for your main home). This tax applies to both residents and non-residents, and it increases if you own more than one property. Some regions, like Madrid, offer full exemptions, but others don’t. If your assets go above €3 million, you may also face an extra solidarity tax with higher rates. In effect, this creates an extra tax for two homes in Spain if your total assets exceed the exemption thresholds.

Annual vs. One-Time Costs

Besides annual taxes, you also face one-time costs of purchasing property in Spain. For example, buying a second-hand home comes with a transfer tax (ITP) of 7%–10%, depending on the region. New homes include a 10% VAT and an extra document tax (AJD). You also pay notary, land registry, and possible gestoría (legal admin) fees. These can add 11%–14% to your total purchase cost, so they should be part of your plan from the start.

How to Reduce Tax Burden on Second Home in Spain

Renting out your second home in Spain can help lower your tax burden. If the property is rented, you may deduct several expenses like mortgage interest, repairs, insurance, utilities, and property management fees. EU and EEA residents are allowed full deductions, but non-EU owners face stricter limits. If the property is rented all year, you don’t have to report imputed income, which saves you taxes. Even during vacant months, the imputed income tax is reduced to 1.1% of the cadastral value if the property’s value was revised in the last 10 years. Taking advantage of second home tax incentives Spain, through legal rentals and accurate expense tracking, can significantly reduce your annual tax costs.

You can also reduce your tax exposure by planning how you own the property. Some common strategies include:

• Co-ownership: Split the ownership to lower each person’s taxable share and use individual deductions.
• Holding companies: Set up a Spanish civil company or a foreign entity to shift taxation to corporate rates, but watch for added rules.
• Usufruct + bare ownership: Keep the right to use the property while giving the future ownership to your heirs, which may reduce inheritance taxes later.

Each method has pros and cons, so it’s smart to get legal advice before deciding. Be aware that these strategies may affect how your IBI tax for a second property is assessed at the local level, since some municipalities apply different rules based on ownership structures.

Non-residents can avoid paying tax twice through Spain’s double tax treaties with many countries. These agreements allow you to credit the Spanish tax you pay against the tax you owe in your home country, preventing double taxation on the same income. To benefit from this, it is important to keep copies of your Modelo 210 tax forms and report the Spanish taxes paid in your home country’s tax return. While these treaties do not eliminate the Spanish tax itself, they ensure you don’t pay the same tax twice. This tax relief is especially important if you rent out the property or sell it in the future. Additionally, regional tax differences across Spain’s autonomous communities can influence how much you owe on second properties, making an understanding of local tax rules essential.