What Are the Property Taxes in Spain?
Quick Answer
Annual IBI runs 0.4-1.1% of cadastral value. Purchase transfer tax varies by region (6% Madrid, 10% Catalonia). New builds pay 10% VAT instead. Capital gains 19-23%.
Spanish property taxes are a regional patchwork, so where you buy matters almost as much as what you buy.
Annual property tax is IBI (Impuesto sobre Bienes Inmuebles). Rates run 0.4-1.1% of cadastral value, which is typically 30-50% below market value. A €400K apartment might have a €180K cadastral value, meaning roughly €900-2,000 annually in IBI. Each municipality sets its own rate within those bounds.
Purchase taxes differ between resale and new-build properties. Resale properties pay ITP (transfer tax), which varies dramatically by region: Madrid charges 6%, Andalusia 7%, Valencia and Catalonia 10%, Balearics 8-11.5% on a sliding scale. On a €500K Costa del Sol property, that's €35K in transfer tax.
New properties from developers pay VAT instead: 10% IVA plus 1-1.5% stamp duty (AJD). The math is similar but funds flow differently.
Capital gains tax applies when you sell. Spanish residents face a progressive structure: 19% on the first €6,000 of gain, 21% on €6K-50K, and 23% above €50K. Non-residents pay a flat 19%.
Here's a tax many non-residents miss: Spain imputes rental income even if you don't actually rent the property. If you own Spanish property and don't live there, the tax office assumes you're benefiting from it and charges roughly 2% of cadastral value times 19-24% tax rate. On a €180K cadastral value, that's maybe €700/year. Not huge, but it catches people off guard.
One strategic note: the 3% retention rule. When a non-resident sells Spanish property, the buyer withholds 3% of the sale price and pays it directly to the Spanish tax authority as an advance on your capital gains tax. You claim any excess back later, but it ties up funds.