Thinking of buying a home on the Costa del Sol? Whether you’re a lifestyle buyer, investor, or second-home seeker, understanding your tax responsibilities is key to making smart property decisions. This guide from Greystone International Group breaks down the key taxes, fees, and hidden costs so you’re never caught off guard.
The purchase price is just the starting point. Depending on whether you’re buying a new-build or resale property, your total costs can vary significantly.
1 – New-build properties are subject to 10% VAT (IVA) plus 1.2% Stamp Duty (AJD), both payable upon signing at the notary.
2 – Resale properties come with a 7% Transfer Tax (ITP), which must be paid within 30 days of signing.
On a €2 million property, that’s a €100,000 difference in tax depending on whether the property is new or resale.
Note: If you buy shares in a company that owns a property (and carries out no real business), the Spanish tax authority treats it as a standard property purchase so all property taxes still apply.
These apply to both new and resale homes:
1 – Legal Fees: Typically 1% + VAT of the purchase price. A lawyer ensures due diligence, manages contracts, and handles taxes.
2 – Notary & Registry Fees: Usually between 0.1% and 0.25% of the purchase price, decreasing as property values rise.
3 – Bank Fees: Banker’s drafts are commonly used for payments at signing, and banks may charge fees based on amount and client profile.
4 – Mortgage Costs: If financing, your main expense is the property valuation (€500–€2,000+ depending on size and value). The bank usually covers other mortgage-related fees.
5- Technical Surveys (Optional): Recommended for second-hand homes, covering plumbing, AC, heating etc., costing €300–€2,000+ depending on property size and condition.
Whether you live in Spain full time or not, property ownership comes with ongoing costs.
An annual municipal tax based on the property’s cadastral value (not market value). Expect to pay €1,000 to €10,000+ depending on the property.
Usually under €400/year, depending on the municipality.
Applies to most apartment complexes and gated communities. Fees vary widely but usually range from €200 to €1,000+ per year. Unpaid fees can lead to legal action, even seizure.
You’ll pay a fixed monthly fee for water and electricity, even if the property isn’t occupied, plus additional costs based on usage.
Even if you don’t live in Spain, you’re still subject to local tax obligations.
1 – If not rented: Taxed on “imputed income” at 25% of 2% of the cadastral value.
2 – If rented: 25% tax on gross rental income. (EU/EEA residents can deduct eligible expenses, lowering the effective rate to 19%.)
Although Andalucía has suspended the regional wealth tax, Spain now applies a national Solidarity Tax on net assets above €3 million:
1 – Residents get a €700,000 tax-free allowance
2 – Residents are taxed on worldwide assets; non-residents only on Spanish assets
Who you buy from matters:
1 – From a private seller: 7% Transfer Tax
2 – From a company: 21% VAT + 1.2% Stamp Duty
That’s a 15.2% difference. On a €1 million plot, this could mean an additional €152,000 in tax.
Always ask your agent about the seller’s legal structure before making an offer.
You’re considered a Spanish tax resident if:
1 – You spend more than 183 days a year in Spain
2 – Your economic interests or family are based there
Residents are taxed on global income and must declare foreign assets over €50,000. Tax rates are progressive, from 19% to 47%. Special schemes like the “Beckham Law” may apply but require specific conditions.
Selling property in Spain involves its own set of taxes and fees
A local tax on the increase in land value since purchase, capped at 20 years.
Applies to the net profit:
1 – EU/EEA Residents: 19%
2 – Non-EU Residents: 24%
3- Companies: 25%
Deductions apply for renovation costs, agent fees, taxes, and professional services, receipts required.
Buyers must withhold 3% of the purchase price and pay it to the tax office on the seller’s behalf. You can apply for a refund, minus any unpaid taxes, through your lawyer. The process takes 6 months.
1 – Real estate agent fees: 3–5% + VAT, typically paid by the seller
2 – Legal fees: Optional but recommended
3- Mortgage cancellation fees: Paid by the seller if applicable
Renting out your property? Here’s what you need to know:
1 – Income Tax:
2 – Letting Agent Fees: Often “no win, no fee”, typically covered by rental income
3 – TPO (Stamp Duty): Rarely enforced for long-term rentals, but technically applies
Renting in the Costa del Sol is usually straightforward:
1 – No hidden taxes or fees
2 – Landlords typically pay the agent’s fee
3- You may need to provide references (e.g. bank statements, payslips)
4- The small rental transfer tax (€24 per €6,000) is rarely enforced
Taxes in Spain can be complex but with the right team on your side, you can buy, own, rent, or sell with confidence. At Greystone International Group, we specialise in helping international clients understand and manage their property obligations from start to finish.
We’re here to help, every step of the way.
