Taxation in Spain: Buyer’s Guide

Spain is a popular Mediterranean destination for purchasing a second home, summer residence, or investment property. With its sunny climate, relaxed lifestyle, competitive property prices, and expanding real estate market, the country continues to attract both local and international buyers. However, understanding the taxes in Spain is crucial before making a purchase. Being informed about property-related taxes helps you avoid unexpected expenses and navigate the buying process with assurance.

In this guide, we explain the key taxes and fees involved when buying property in Spain, and what costs you should be aware of before and after the transaction.

Who Is Considered a Tax Resident in Spain?

Tax residency is a key factor determining your obligations under Spain’s tax system.

• You are considered a tax resident in Spain if any of the following conditions apply:
• You spend more than 183 days in Spain during a calendar year

Your main economic interests or business activities are located in Spain

What Does This Mean for You?

Tax residents are required to declare worldwide income and are subject to Spain’s income tax on all sources of income, both local and international

Non-residents, on the other hand, are only taxed on their Spanish-sourced income, including Spanish non-residency property tax, which is often levied on the imputed rental income of a second home, even if the property is not rented out.

Understanding your residency status is essential for long-term planning, especially if you're purchasing property as part of a broader relocation or investment strategy.

What About Double Taxation?

Spain has signed double taxation treaties with over 90 countries, including the UK, the US, Germany, France, and many more. These agreements prevent individuals from being taxed twice on the same income in both Spain and their country of residence.

If you're a non-resident buyer and pay tax on rental income or capital gains in Spain, you can typically offset that tax against what you owe in your home country—avoiding double taxation.

To benefit from this, you must:

• Provide proof of residency in your home country (often via a certificate of tax residency)
• Declare the Spanish income to your local tax authorities
• Apply for relief under the appropriate tax treaty

Understanding this is especially important if you're planning to rent out your property or earn income from Spain's real estate market.

Key Taxes and Fees for Property Buyers in Spain

When purchasing a property in Spain, buyers face several taxes and legal costs. These vary depending on whether the property is newly built or resale, its location, and your residency status. Let’s explore each cost in detail.

1. Property Transfer Tax (Impuesto de Transmisión Patrimonial – ITP)

This is one of the most important taxes for buyers of resale (second-hand) properties in Spain. The property transfer tax in Spain is charged as a percentage of the declared purchase price. The rate is set by each Autonomous Community, so it varies depending on where the property is located.

Here are some current ITP rates:

Andalusia – 7%

Balearic Islands– 8% to 13% (progressive based on value)

Canary Islands – 6.5%

Catalonia – 10% to 11%

Murcia – 8%

Valencia – 10% to 11%

The State sets a minimum rate of 6%, and each region adjusts it based on their tax policies. This means you’ll need to check the rate specifically for the region where you plan to buy.

2. Value Added Tax (Impuesto sobre el Valor Añadido – IVA)

VAT on property in Spain applies only to newly built properties purchased directly from a developer. This includes both residential and commercial properties. The standard VAT rates are:

• 10% for residential properties (e.g., apartments, houses)
• 21% for commercial real estate and plots of land

This VAT is added directly to the purchase price and paid at the time of signing the deed.

So, if you’re buying a new house in Spain, you’ll pay VAT instead of ITP. However, both taxes are not applied at the same time.

3. Stamp Duty (Actos Jurídicos Documentados – AJD)

This tax applies in addition to VAT on new properties and is paid when the property is officially registered in the Land Registry. Stamp Duty rates range between 0.5% and 1.5% of the purchase price, depending on the region.

4. Notary and Land Registry Fees

These are administrative costs associated with signing the purchase deed (escritura) and registering the property. Combined, they usually range from 0.5% to 1% of the purchase price. The fees depend on the property value and the complexity of the transaction.

5. Legal Fees

Although not mandatory, hiring a lawyer when buying property in Spain is highly recommended. Legal fees typically range from 1% to 1.5% of the purchase price. Your lawyer will help you ensure the legality of the transaction, verify the property's status, and guide you through the tax obligations.

6. Additional Costs and Hidden Fees

When considering Spain real estate investment, buyers should also plan for some lesser-known costs:

• Spanish non-resident property tax: If you're not a Spanish resident, you'll be subject to income tax on the potential rental value of the property, even if you don’t rent it out.
• Utility setup costs: Connecting water, electricity, and internet services.
• Home insurance: Usually mandatory if you're taking out a mortgage.
• Bank charges and translation fees.

All these expenses can add up, so it's important to factor them in during the budgeting process.

How to Register a Property in the Land Registry

After signing the deed before a notary, the property must be registered in the Spanish Land Registry (Registro de la Propiedad). Your lawyer or notary typically submits the required documents. Once registered, the property is officially in your name. This process also triggers tax obligations such as paying the AJD or ITP, depending on whether the property is new or a resale.

How to Fulfill Tax Obligations After Buying

After buying, you’ll need to complete several steps:

1. Pay the applicable taxes (ITP or IVA + AJD) within 30 days of signing the deed.

2. Submit tax forms through the regional tax office.

3. Register the deed in the Land Registry.

4. Declare the property in your annual Spain income tax return if you're a resident.

5. For non-residents, declare and pay Spanish non-resident property tax annually.

Understanding Real Estate Tax in Spain

Taxes and fees are an unavoidable part of buying property in Spain but with proper planning, they don’t need to be overwhelming. The key is to understand the tax differences between new and resale homes, consider regional variations in rates, and work with legal professionals to avoid surprises.

Whether you're purchasing a summer home, making a Spain real estate investment, or relocating permanently, being informed about Spain property tax laws helps you make smarter decisions.

For anyone asking about tax when buying a house in Spain, this guide offers the essential breakdown. You can always consult Spain Homes ® for the latest legal and financial advice tailored to your situation.