Spain Property Tax Guide 2026: Complete Tax Breakdown for Buyers

Understanding Spanish Property Taxes: What You Need to Know

Buying property in Spain involves several taxes that foreign buyers must understand before making an investment. Whether you're purchasing a holiday home in Costa Blanca or relocating permanently to the Mediterranean, this comprehensive guide covers every tax you'll encounter in 2026—from purchase taxes to annual obligations and capital gains when you sell.

Key 2026 Update: The Valencia region (Comunitat Valenciana) has passed Ley 5/2025, reducing property transfer tax from 10% to 9% effective June 1, 2026. This makes Costa Blanca even more attractive for property investors.

Purchase Taxes: What You Pay When Buying Property

Transfer Tax (ITP) for Resale Properties

When purchasing a resale (second-hand) property, you'll pay the Impuesto sobre Transmisiones Patrimoniales (ITP). This is the most common scenario for buyers in Costa Blanca, as most properties on the market are resales.

Valencia Region ITP Rates 2026:

• Standard rate: 9% (reduced from 10% as of June 1, 2026)
• Properties over €1 million: 11%
• First-time buyers under 35: 8% (conditions apply)
• Large families: 4% (with certificate)
• Properties in need of renovation: 6% (specific criteria)

Example: For a €500,000 villa in Javea, you would pay €45,000 in ITP (9%) after June 1, 2026, compared to €50,000 (10%) under the previous rates—a savings of €5,000.

VAT and Stamp Duty for New-Build Properties

Purchasing directly from a developer? You'll pay VAT (IVA) instead of ITP, plus Stamp Duty (AJD):

• VAT (IVA): 10% of purchase price
• Stamp Duty (AJD): 1.4% (reduced from 1.5% as of June 1, 2026)
• Total for new builds: 11.4%

Note: Commercial properties and building plots have a higher VAT rate of 21%.

Other Purchase Costs

Beyond taxes, budget for these additional costs:

• Notary fees: €600-€1,500 (based on property value)
• Land Registry: €400-€800
• Legal fees: 1-1.5% of purchase price
• Mortgage costs: Valuation €300-€500, arrangement fees vary

Total purchase costs: Plan for 10-13% on top of the property price for resales, or 12-15% for new builds.

Annual Property Taxes in Spain

IBI (Impuesto sobre Bienes Inmuebles)

The IBI is Spain's equivalent of council tax or property tax, paid annually to your local town hall (Ayuntamiento). The rate varies significantly between municipalities in Costa Blanca.

IBI Rates by Municipality 2025 (Costa Blanca):

• Torrevieja: 0.400% (lowest in the region)
• Orihuela Costa: 0.695%
• Alfaz del Pi: 0.610%
• Altea: 0.720%
• Benidorm: 0.894%
• Calpe: 0.880%
• Javea: 0.672%
• Moraira (Teulada): 0.540%
• Denia: 1.050% (highest in the region)

How IBI is calculated: The tax is based on the cadastral value (valor catastral), which is typically 30-50% of market value. Multiply your cadastral value by your municipality's rate.

Example: A property with a cadastral value of €150,000 in Javea would pay approximately €1,008 annually (€150,000 x 0.672%).

Basura (Garbage Collection Tax)

This municipal fee covers waste collection and varies by area:

• Range: €80-€250 per year
• Average in Costa Blanca: €120-€150

Community Fees (for apartments and urbanizations)

If your property is part of a community, expect:

• Apartments: €50-€200/month
• Villas in urbanizations: €100-€400/month
• Luxury developments: €300-€800/month

Community fees cover shared amenities like pools, gardens, security, and building maintenance.

Complete Cost Breakdown: Real Examples

Let's walk through complete tax calculations for typical property purchases in Costa Blanca to give you a clear picture of your total costs.

Example 1: €400,000 Resale Apartment in Calpe

Purchase taxes and costs:

• ITP (9% from June 2026): €36,000
• Notary fees: €850
• Land Registry: €550
• Legal fees (1%): €4,000
• Total purchase costs: €41,400 (10.35%)

Annual running costs:

• IBI (cadastral €120,000 x 0.88%): €1,056
• Basura: €130
• Community fees: €1,800/year
• IRNR (non-resident, not rented): €250
• Total annual: €3,236

Example 2: €850,000 Villa in Javea

Purchase taxes and costs:

• ITP (9% from June 2026): €76,500
• Notary fees: €1,200
• Land Registry: €700
• Legal fees (1%): €8,500
• Total purchase costs: €86,900 (10.22%)

Annual running costs:

• IBI (cadastral €280,000 x 0.672%): €1,882
• Basura: €150
• Community fees: €3,600/year
• IRNR (non-resident, not rented): €585
• Total annual: €6,217

Example 3: €1.2 Million Luxury Property in Moraira

Purchase taxes and costs (note: 11% ITP applies above €1M):

• ITP (11% for €1M+ properties): €132,000
• Notary fees: €1,400
• Land Registry: €800
• Legal fees (1%): €12,000
• Total purchase costs: €146,200 (12.18%)

These examples show why understanding the €1 million threshold is crucial—crossing it adds 2% to your purchase tax rate.

Non-Resident Property Owner Taxes

IRNR (Impuesto sobre la Renta de No Residentes)

If you don't live in Spain for more than 183 days per year, you're classified as a non-resident and must pay the Non-Resident Income Tax annually—even if you don't rent out your property.

For properties NOT rented out:

• Imputed income: 1.1% of cadastral value (if revised after 1994) or 2% (if not revised)
• Tax rate: 19% for EU/EEA residents, 24% for non-EU residents

Example: A British owner with a property (cadastral value €150,000, revised) pays: €150,000 x 1.1% = €1,650 imputed income x 19% = €313.50 annually.

For rented properties:

• EU/EEA residents: 19% on net rental income (can deduct expenses)
• Non-EU residents: 24% on gross rental income (no expense deductions)

Filing deadline: December 31 of the following year. Use Modelo 210.

Wealth Tax (Impuesto sobre el Patrimonio)

Spain applies a wealth tax on net assets above certain thresholds:

• Non-residents: €700,000 exemption on Spanish assets
• Valencia residents: €1,000,000 exemption (increased from €500,000 via Ley 5/2025, effective December 31, 2025)
• Rates: Progressive from 0.2% to 3.5%

Important: Your primary residence in Spain gets an additional €300,000 exemption for residents.

Solidarity Tax on Large Fortunes: For net wealth exceeding €3 million, an additional national tax of 1.7%-3.5% applies.

Capital Gains Tax When Selling Property

CGT Rates for Non-Residents

When you sell Spanish property, you'll pay Capital Gains Tax on the profit:

• All non-residents (EU and non-EU): 19% flat rate

How it's calculated:

1. Sale price minus purchase price
2. Minus purchase costs (taxes, notary, legal fees)
3. Minus improvement costs (with invoices)
4. Apply inflation coefficient (for properties bought before 1995)
5. 19% tax on the resulting gain

The 3% Retention Rule

Critical for sellers: When a non-resident sells property in Spain, the buyer must withhold 3% of the sale price and pay it directly to the Spanish tax authority (Hacienda) as an advance on your CGT.

Example: Selling for €600,000, the buyer retains €18,000 and pays it to Hacienda. If your actual CGT liability is €15,000, you can reclaim the €3,000 difference.

Filing requirement: Submit Modelo 210 within 4 months of the sale to either pay additional tax or request a refund.

CGT Exemptions

• Reinvestment relief: EU/EEA residents over 65 can be exempt if reinvesting in a new primary residence within 2 years
• Over 65 with habitual residence: Full exemption if selling your main home after living there for 3+ years

Plusvalia Municipal (Local Capital Gains Tax)

This separate municipal tax is paid to your town hall based on the increase in land value during your ownership period:

• Calculation: Based on cadastral land value and years of ownership
• Who pays: Seller (unless negotiated otherwise)
• Exemption: If you sell at a loss, you may be exempt (requires proof)

2026 Update: Following Supreme Court rulings, you cannot be charged Plusvalia if the sale price is lower than the purchase price. Request a "plusvalia a perdidas" exemption with documentation.

Inheritance and Gift Tax

Spain's inheritance tax (Impuesto sobre Sucesiones y Donaciones) varies by region. Valencia has some of the most favorable rates:

Valencia Region Benefits 2026:

• Spouse and children: 99% reduction (effectively 1% tax)
• Parents and grandparents: 99% reduction
• Siblings: 25% reduction (from June 2026), increasing to 50% (June 2027)
• Other relatives and non-relatives: Standard progressive rates (7.65% to 34%)

For non-residents inheriting Spanish property: EU residents can apply the most favorable regional rules. Non-EU residents may face higher effective rates.

Double Taxation Treaties: Avoiding Tax on the Same Income Twice

Spain has double taxation agreements with over 90 countries, including the UK, USA, Germany, France, and most EU nations. These treaties prevent you from paying tax twice on the same income.

How It Works for Property Owners

Rental income: You'll declare Spanish rental income in Spain first (paying 19% IRNR for EU residents). In your home country, you can typically claim a foreign tax credit for taxes already paid to Spain, reducing or eliminating double taxation.

Capital gains: The treaty typically gives Spain the primary right to tax gains on Spanish property. Your home country may then exempt this gain or allow a credit for Spanish CGT paid.

Example for UK residents: After selling a Spanish property and paying 19% CGT in Spain, you report the gain to HMRC. The UK allows a credit for Spanish tax paid, so you only pay UK CGT on any difference if your UK rate exceeds 19%.

Important Considerations

• No treaty benefit for IBI or purchase taxes: These are not covered by treaties and cannot be offset against home country taxes
• Keep records: Maintain proof of Spanish tax payments (Modelo 210 receipts) for claiming foreign tax credits
• Consult professionals: Treaty interpretation can be complex; work with advisors in both countries

Tax Planning Tips for Property Buyers

Before Purchase

• Check cadastral value: Request the catastro reference to estimate annual IBI
• Compare municipalities: A similar property in Torrevieja costs less in IBI than in Denia
• Time your purchase: Buying after June 1, 2026 saves 1% on ITP

During Ownership

• Keep all invoices: Improvements reduce capital gains when selling
• Set up direct debits: Avoid penalties for late IBI or basura payments
• File IRNR annually: Even if you don't rent out, non-residents must file

When Selling

• Gather documentation: Original purchase deed, improvement invoices, utility bills
• Request NIE early: Both buyer and seller need valid NIE numbers
• Plan the 3% retention: Factor this into your cash flow planning

Frequently Asked Questions

What is the property tax rate in Spain for foreigners?

Foreigners pay the same property taxes as Spanish citizens. The main purchase tax (ITP) in Valencia is 9% from June 2026 for resales, or 10% VAT plus 1.4% stamp duty for new builds. Annual IBI rates range from 0.4% to 1.05% of cadastral value depending on municipality.

How much tax do I pay when buying property in Spain?

For a resale property in Costa Blanca from June 2026, expect to pay 9% ITP (or 11% for properties over €1 million). Including notary, registry, and legal fees, total purchase costs are typically 10-13% of the property price.

Do non-residents pay more tax on Spanish property?

Non-residents pay an annual imputed income tax (IRNR) of approximately 0.2-0.4% of cadastral value, even if the property isn't rented. EU residents pay 19% on rental income (with expense deductions), while non-EU residents pay 24% on gross income without deductions.

What is IBI tax in Spain?

IBI (Impuesto sobre Bienes Inmuebles) is the annual local property tax paid to your municipality. Rates in Costa Blanca range from 0.40% (Torrevieja) to 1.05% (Denia) of the cadastral value. It's similar to council tax in the UK or property tax in the US.

How is capital gains tax calculated on Spanish property?

Non-residents pay 19% CGT on the profit (sale price minus purchase price, costs, and improvements). The buyer withholds 3% of the sale price as an advance payment. You file Modelo 210 within 4 months to settle any difference.

Can I avoid paying Plusvalia if I sell at a loss?

Yes. Since 2021 Spanish Supreme Court rulings, you cannot be charged Plusvalia municipal if you can prove the property was sold for less than the purchase price. Provide your purchase and sale deeds to the town hall to claim exemption.

What are the new tax changes in Valencia for 2026?

Ley 5/2025 brings several changes effective June 1, 2026: ITP reduced from 10% to 9% (11% for €1M+), AJD reduced from 1.5% to 1.4%, and wealth tax exemption increased to €1 million for residents. Inheritance tax reductions for siblings increase in phases through 2027.

Do I need a fiscal representative in Spain as a non-resident?

While not legally mandatory for EU residents, having a fiscal representative or gestor is highly recommended. They handle annual IRNR filings, ensure IBI is paid on time, and manage communications with Spanish tax authorities on your behalf.

Conclusion: Budgeting for Spanish Property Taxes

Understanding Spanish property taxes is essential for accurate budgeting when buying in Costa Blanca. With the 2026 tax reductions from Ley 5/2025, the Valencia region has become even more competitive for international buyers.

Quick Reference:

• Purchase (resale from June 2026): 9% ITP + 1-2% fees = 10-11% total
• Purchase (new build): 10% VAT + 1.4% AJD + fees = 12-14% total
• Annual (non-resident): IBI + basura + IRNR = €1,500-€4,000 typical
• Sale: 19% CGT on profit + Plusvalia municipal

For personalized tax advice and to explore properties in Javea, Moraira, Altea, Calpe, and across Costa Blanca, contact Casa Rica Estate. Our team works with trusted local tax advisors to ensure your Spanish property purchase is structured efficiently.