Spanish Property Tax Guide for Buyers | Hansson & Hertzell

Spanish Property Tax: The Complete Guide for International Buyers on Costa Blanca

Purchasing a property in Spain is one of the most rewarding investments you can make — sunshine, lifestyle, and long-term value all come together on the beautiful Costa Blanca. However, understanding Spanish property tax is essential before you sign on the dotted line. From transfer taxes at the point of sale to annual obligations like IBI, the Spanish tax system has several layers that every buyer should be aware of.

At Hansson & Hertzell, we have guided hundreds of international buyers through the Spanish property market, ensuring they understand every financial commitment involved. This comprehensive guide breaks down the key taxes you will encounter when buying and owning property in Spain, with a special focus on the Costa Blanca region and the Valencian Community.

Taxes When Buying Property in Spain

The taxes you pay when purchasing a property in Spain depend on whether the home is a new build or a resale. For new build properties — the specialty of Hansson & Hertzell — you will pay IVA (VAT) at 10% of the purchase price, plus AJD (Stamp Duty) which in the Valencian Community is currently 1.5%. This means your total tax burden on a new build purchase is approximately 11.5% of the property price.

For resale properties, you pay the ITP (Transfer Tax) instead of VAT. In the Valencian Community, the ITP rate is 10% for most transactions. It is worth noting that rates can differ between Spain’s autonomous communities, so buyers looking in other regions should verify the local rate. On Costa Blanca, whether you are buying in Torrevieja, Calpe, Javea, Alicante, Benidorm, or Orihuela Costa, the Valencian rates apply.

Additional purchase costs include notary fees (typically €600–€1,200), land registry fees (similar range), and legal fees if you hire a solicitor, which we strongly recommend. In total, buyers should budget approximately 12–14% on top of the purchase price for all taxes and associated costs.

Annual Property Taxes in Spain: IBI and Beyond

Once you own a property in Spain, you become liable for several annual taxes. The most significant is the IBI (Impuesto sobre Bienes Inmuebles), Spain’s equivalent of council tax or property tax. IBI is calculated based on the catastral value (cadastral value) of your property, which is typically well below market value. Rates vary by municipality — in Torrevieja, for example, IBI tends to be very affordable compared to northern European equivalents.

If you are a non-resident property owner, you must also pay the IRNR (Non-Resident Income Tax). If the property is not rented out, you are taxed on an imputed income of 1.1% (or 2% in some cases) of the catastral value, at a flat rate of 19% for EU/EEA residents or 24% for non-EU residents. If you do rent the property, your actual rental income is taxed at these same rates.

Other annual costs may include community fees (for apartments or gated communities), basura (rubbish collection tax), and home insurance. Hansson & Hertzell can help you estimate these costs accurately for any property you are considering.

Capital Gains Tax When Selling Property in Spain

If you eventually sell your Spanish property, you will be subject to capital gains tax (CGT) on any profit. For tax residents in Spain, CGT is progressive: 19% on the first €6,000 of gain, 21% on gains between €6,000 and €50,000, 23% on gains between €50,000 and €200,000, and 26% on gains above €200,000. Non-residents pay a flat rate of 19% (EU/EEA) or 24% (non-EU).

An important mechanism to be aware of is the 3% retention: when a non-resident sells a property, the buyer is legally required to withhold 3% of the sale price and pay it directly to the Spanish tax authorities as an advance on the seller’s CGT liability. If the actual tax owed is less than the 3%, the seller can apply for a refund.

There are also exemptions worth exploring. For instance, Spanish tax residents over 65 who sell their primary residence may be exempt from CGT entirely. Reinvestment relief may also apply if proceeds are used to purchase a new primary residence within two years.

Wealth Tax and the Valencian Community

Spain levies a wealth tax (Impuesto sobre el Patrimonio) on individuals whose net assets exceed certain thresholds. The rules and allowances vary by autonomous community. In the Valencian Community, the general allowance is €500,000, with an additional €300,000 exemption for your primary residence. Rates range from 0.28% to 3.5% on a progressive scale.

For most international buyers purchasing a holiday home or investment property on Costa Blanca, wealth tax only becomes relevant for higher-value portfolios. Nevertheless, it is important to factor this into your long-term financial planning, particularly if you own multiple properties in Spain.

How Hansson & Hertzell Helps You Navigate Property Tax

Tax planning is a critical part of any property purchase, and at Hansson & Hertzell, we make sure our clients are never caught off guard. We work closely with trusted local solicitors and tax advisors who specialize in international property transactions on Costa Blanca. From your initial inquiry to well after completion, we provide guidance on tax obligations, timelines, and cost estimates.

Whether you are buying a stunning new build villa in Calpe, a modern apartment in Torrevieja, or an exclusive property in Javea, our team ensures you understand every euro involved. We believe that an informed buyer is a confident buyer — and that confidence is what makes the Spanish property dream a reality.

Frequently Asked Questions About Spanish Property Tax

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

For new build properties in the Valencian Community (including Costa Blanca), you pay 10% IVA (VAT) plus 1.5% AJD (Stamp Duty), totalling approximately 11.5% of the purchase price. Additional costs for notary, registry, and legal fees bring the total to around 12–14%.

What is IBI and how much does it cost on Costa Blanca?

IBI (Impuesto sobre Bienes Inmuebles) is Spain’s annual property tax, similar to council tax. It is calculated on the catastral value of your property and varies by municipality. On Costa Blanca, IBI is generally very affordable — often just a few hundred euros per year for a typical apartment.

Do non-residents pay income tax on Spanish property even if they don’t rent it out?

Yes. Non-resident owners must pay IRNR (Non-Resident Income Tax) based on an imputed income of 1.1–2% of the catastral value, taxed at 19% for EU/EEA residents or 24% for others. This applies even if the property is not rented out.

Can Hansson & Hertzell help me with tax planning for my Spanish property?

Absolutely. We work with experienced local solicitors and tax advisors who specialize in international property transactions. Contact us at +34 865 753 261 or info@hanssonhertzell.com for personalized guidance on all property tax matters.

Get Expert Guidance on Spanish Property Tax

Ready to invest in Costa Blanca with full confidence? Contact Hansson & Hertzell today and let our experienced team guide you through every aspect of the buying process, including all tax obligations. Call us at +34 865 753 261 or email info@hanssonhertzell.com — we are here to help.

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