Buying property on the Costa del Sol is exciting — but understanding the taxes is where smart buyers protect their investment.
Whether you’re purchasing a holiday home, relocating, or investing, Spain has a clear but different tax system compared to the UK, US or Northern Europe.
In this guide, we break down all key property taxes in Spain in a simple, practical way.
💰 1. Purchase Taxes in Spain (One-Time Costs)
When buying property, taxes depend on whether the property is new or resale.
🏠 Resale Property → ITP (Transfer Tax)
- ITP (Impuesto de Transmisiones Patrimoniales)
- Typical rate in Andalusia: 7%
👉 Example:
€300,000 property → €21,000 tax
✔ Paid once at purchase
✔ Applies to most second-hand homes
🆕 New Build Property → VAT + AJD
If you buy directly from a developer:
- IVA (VAT): 10%
- AJD (Stamp Duty): ~1–1.5%
👉 Example:
€300,000 → €30,000 (IVA) + €3,000–€4,500 (AJD)
✔ Higher upfront cost
✔ But comes with:
- Modern build
- Energy efficiency
- Strong capital growth potential
🏡 2. Annual Property Taxes in Spain
Once you own a property, you’ll have ongoing yearly costs.
📊 IBI (Property Tax)
- Based on valor catastral (government value, not market price)
- Paid to the local municipality
👉 Typical range:
- €300 – €1,200+ per year
✔ Lower than many countries
✔ Varies by location and property type
🌍 Non-Resident Income Tax (IRNR)
If you don’t live in Spain full-time:
- You pay tax on “imputed income”
- Even if the property is not rented
👉 Typical rate:
- ~19% (EU residents)
- ~24% (non-EU residents)
✔ Based on cadastral value
✔ Usually a small annual cost
📈 3. Rental Income Tax
If you rent your property:
Long-Term Rentals:
- Taxed as regular income
- Expenses can be deducted
Short-Term Rentals:
- Same tax rates apply
- Higher income potential
👉 Net yields on the Costa del Sol:
- Typically 4–7%
- Well-managed properties → up to 10%+
💸 4. Capital Gains Tax (When Selling)
When you sell your property:
- 19% – 28% tax depending on profit
- Based on difference between:
- Purchase price
- Selling price
Additional costs:
- Plusvalía (IIVTNU)
→ Tax on land value increase
👉 Good news:
- Costs (renovations, fees, taxes) can reduce taxable gain
🧾 5. Other Costs to Consider
Beyond taxes:
- Notary fees
- Land Registry
- Legal fees (~1%)
👉 Total buying costs:
- Resale: ~9–10%
- New build: ~12–14%
📊 Real Insight (Costa del Sol)
- Strong demand from international buyers
- Limited supply → prices rising
- Rental demand growing (tourism + relocation)
👉 This is why understanding taxes is key:
It directly affects your ROI and long-term profit
⚠️ Common Mistakes Buyers Make
- ❌ Confusing ITP vs IVA
- ❌ Underestimating total purchase costs
- ❌ Ignoring non-resident tax
- ❌ Not planning exit taxes
👉 Small mistakes = big money over time
💡 Pro Tip
The best deals are not always the cheapest properties —
but the ones where:
- Taxes are optimized
- Rental potential is strong
- Location drives long-term demand
🏡 Explore Properties on the Costa del Sol
If you’re looking to buy in Spain, the next step is simple:
👉 Browse available homes here.
We work closely with trusted agents and developers to give you:
- Real listings
- Verified properties
- Local insights
📞 Need Help Understanding Your Costs?
Every buyer situation is different:
- Residency status
- Budget
- Investment goals
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