Understanding Property Costs and Taxes in Spain (2025 Financial Overview)

Monika
Oct 31
3 min read

Buying a property in Spain is a rewarding decision, but understanding the complete financial picture—from initial purchase costs to long-term ownership taxes—is crucial. At Andamara Partners, we emphasize that the final expense far exceeds the listed property price.

Experts widely recommend budgeting an additional 10% to 12% of the property's purchase price to cover compulsory taxes and fees. This comprehensive guide breaks down the essential costs for both residents and non-residents, with a special focus on the recurring tax obligations for non-resident owners.

1. Initial Purchase Taxes: New vs. Resale

The primary tax you pay upfront depends entirely on the type of property you buy.

A. Taxes for New Construction (VAT + AJD)

When acquiring a newly built home directly from a developer, two taxes apply:

VAT (Value Added Tax / IVA): Generally set at 10% of the purchase price.
AJD (Stamp Duty / Actos Jurídicos Documentados): This varies significantly by region, as it is controlled by the Autonomous Communities.

Autonomous Community	VAT Rate	AJD Rate
Andalusia (Including Almería)	10.0%	1.2%
Valencian Community (Including Alicante)	10.0%	1.5%
Region of Murcia	10.0%	$1.5%
Madrid	10.0%	0.75%

B. Tax for Resale Properties (ITP)

When purchasing a pre-owned home, the VAT and AJD are replaced by a single regional tax:

ITP (Property Transfer Tax / Impuesto de Transmisiones Patrimoniales): This tax is applied to the registered price and is determined by the Autonomous Community.

Autonomous Community	ITP Rate
Andalusia (Including Almería)	7.0%
Region of Murcia	8.0%
Valencian Community (Including Alicante)	10.0%
Madrid	6.0%

2. Fixed Fees and Professional Costs

These mandatory costs are incurred during the transaction process and are fixed by state regulation or determined by the professional providing the service.

Cost Category	Typical Estimate (Based on €250,000 Property)	Notes
Notary Fees	€875 - €1,000 (approx.)	Fees are regulated and depend on the property price and complexity.
Land Registry Fees	€400 - €700 (approx.)	Fees are fixed by Spanish regulations and relate directly to the property price.
Adviser/Lawyer Fees	Varies (Recommended)	Hiring a legal and fiscal expert is essential for international buyers to ensure compliance and avoid pitfalls.

3. Mortgage-Related Costs

If you require financing, two additional fees apply:

Property Valuation (Tasación): This is mandatory for a mortgage application and costs between €250 and €600.
Opening Fee: Some banks may charge an opening fee up to 2% of the capital loaned, though many no longer apply it.

Mortgage Difference: Residents vs. Non-Residents

Banks typically offer up to 80% financing on the purchase or appraisal value for residents, but this percentage is often lower (e.g., 60%-70%) for non-residents.

4. Crucial Recurring Taxes for Non-Resident Owners

Once you own a property in Spain, your long-term tax obligations depend on your resident status. Non-residents must be vigilant about three ongoing taxes:

A. Non-Resident Income Tax (IRNR) - The Deemed Tax

This tax must be paid annually by non-residents, even if the property is not rented out. It is based on the imputed income the property could generate:

Calculation: The taxable base is typically 1.1% of the property's cadastral value (valor catastral).
Tax Rates:
- 19% for residents of the EU, Norway, and Iceland.
- 24% for non-residents from outside the EU/EEA.
Filing: The annual deemed tax return (Form 210) must be submitted by December 31st following the end of each tax year.

B. Rental Income Tax

If you rent out your property, you must pay tax on the rental income:

Tax Rates (on income): 19% for EU/EEA residents, 24% for non-EU residents.
Allowable Expenses: Only residents of the EU, Norway, and Iceland can deduct allowable expenses (such as mortgage interest, IBI, insurance, and maintenance costs) to lower their taxable income. Non-EU residents cannot deduct expenses.

C. Annual Real Estate Tax (IBI)

This is a local municipal tax that applies to all property owners (residents and non-residents).

Rate: It is based on the cadastral value (valor catastral) and typically ranges between 0.4% and 1.1% for urban properties, set by the local town hall.
Payment: It is due annually.

D. Wealth Tax (Impuesto sobre el Patrimonio)

Liability: Non-residents are only subject to Wealth Tax on assets located in Spain if their Spanish assets exceed €700,000.
Rates: Rates vary by region and asset value, generally ranging from 0.2% to 3.5%. The filing deadline is typically May to June.

At Andamara Partners, we specialize in the complete purchase process and the complex ongoing fiscal obligations for non-residents. Working with professionals ensures you stay compliant and avoid potential penalties from the Spanish tax authorities, which have become increasingly active in pursuing unpaid non-resident taxes.