What taxes do I have to pay while owning a property in Spain?

Regardless of whether you buy a home in Spain to live in or to invest, you will have to face certain costs. In this post we explain them in detail so you can make an informed decision.

These are the taxes one must pay while owning a property in Spain, including also taxes on rental income if it is an investment property.

Property Taxes (IBI)

Property owners must pay the Property Tax (IBI) once a year. This payment can be divided into different instalments. The IBI is calculated through a coefficient of the cadastral value, determined by each Council, which generally ranges between 0.4% and 1.3%.

Wealth Tax

This tax is limited to high net worth individuals and only applies to those with a taxable income of more than 700,000 euros. The taxable base will measure the tax rate:

  • Over €668,499.75 at a rate of 0.9%, 
  • Over €1,336,999.51 at a rate of 1.3%.
  • Over 2.673.999,01€ rate of 1,7%.
  • Over 5.347.998,03€ rate of 2,1%.
  • 10.695.996,06€ and upwards, a rate of 3,5%.

Waste & Water Charges

There are other less frequent taxes such as waste or water charges. These taxes consist of the payment of fees for the collection of urban waste or the use of running water in isolated urbanisations.

Second Residency Tax

In case of having a second residence, this must be accounted for in the annual income tax return, in which the owner has to pay a tax rate on the cadastral value of the property.

Generally, a 2% tax rate is applied to the cadastral value that appears in the Property Tax. In case the cadastral value is not determined or has been revised or modified by valuation in the previous 10 years, 1.1% is applied.

Tax on Rental Income

If you decide to rent the property you will have to pay 24% of the income perceived without any cost deductions. However, if you reside in a EU country (also Island and Norway are included) the rate decreases to 19% and you are also entitled to deduct any rental costs. The declaration should be done every trimestre.

Time to buy a property in Spain!

So, with all of that in mind, it’s time to get searching for your dream home in Spain. And don’t forget that here at Properplan, our experts can help you with the whole process; search, finance and conveyance all in one place.

Please book here a free buying consultation and start your journey to become a homeowner in Spain.

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