Ownership Taxes

The taxes you need to pay when you buy a house in Spain will, in some cases, depend on the type of property purchased.

Value Added Tax (IVA): This is only applicable in the first stage (buying directly from the property developer). The amount to pay is calculated on a percentage of the deed price (currently 7% for the property and 16% for any additional extras such as an additional terrace or a swimming pool that wasn’t on the original plan).

Tax on Property Transfers (ITP): This is applicable to pre-owned properties. Normally it is 7% of the deed price, although it depends on each autonomous community.

Tax on Documented Legal Acts (AJD): When the transaction is subject to IVA and not ITP, you also have to pay tax on documented legal acts. The percentage depends on the autonomous community the property is located in.

Tax on the increase in the Value of Urban Land (Plus valia): This is a municipal percentage tax levied on the increase in rateable land value, since the last transfer of ownership. As there are several variable factors used in calculating this tax (location, area of land, building volume permitted, period of ownership of the vendor), you should ask your lawyer to establish this cost before you exchange private contracts.

After Buying

As a property-owner in Spain, you have to pay the following taxes each year: 

Property Tax: A yearly municipal tax on each property you own.

Income Tax A yearly government tax on the income generated by your properties or any other type of income in Spain.

Net Wealth Tax: A yearly municipal Tax on your net wealth in Spain as of December 31st. If you are resident the tax is calculated on the value of your worldwide assets in excess of the current principal residence exemption of 150,000 euros. Non-residents are only required to include their assets in Spain, but they do not receive the exemption. The annual tax on the first 170,000 euros is 0.2%, rising to a marginal rate of 2.5% on assets over 10.7 million euros, although some autonomous regions are allowed to set their own rates.

Local Rates: Local rates are payable annually, and are calculated from the catastral (rateable value) of the land and the building, according to its type, location, and usage. The local municipal Town Hall decides on the percentage of the value of the property to be charged in respect of local rates.

Rubbish Collection & Water Rates: The rubbish collection rate is applied by the Town Hall according to the size of property and payable every 6 months. Water consumption is calculated by the water meter and is payable every 3 months. Payment can be made directly at the Town Hall or by bank with a direct debit mandate.

Community Fees: Owners of apartments in a building, or villas and houses on an estate that are members of a Community of Co-Proprietors or Homeowners Association share responsibility for the maintenance of all communal areas of the building or estate.

A budget for the annual community expenses is presented at the annual general meeting of co-proprietors, for those present at the meeting to approve by majority vote. Expenses can vary substantially, according to the services required and normally include salary and social security of the hall porter, common garden maintenance, lift maintenance, repairs to building, refuse collection, electricity for lighting common areas, insurance for building, security if required, and administration fees. The President of the community must, by law, be an owner and serves without pay.