A Costa Blanca property can look attractively priced until the buyer adds the costs that sit outside the asking price. That is why Spanish property taxes explained clearly, before you make an offer, can prevent expensive surprises and help you compare homes fairly in Torrevieja, Orihuela Costa, Murcia, and beyond.
The exact amount depends on whether the home is resale or new build, where it is located, how you use it, and your tax residence. A well-planned purchase budget should include taxes, notary and registry fees, legal support, and any mortgage-related costs – not just the sale price.
Spanish property taxes explained at purchase
The first question is simple: are you buying a resale home or a newly built property from a developer? The answer changes the main tax you pay.
Resale homes: Transfer Tax
Most existing homes are subject to Transfer Tax, known in Spain as ITP. It is normally paid by the buyer and calculated on the higher of the declared purchase price or the tax authority’s reference value, where one applies. This point matters. A low agreed price does not always mean a lower tax bill if the official reference value is higher.
In the Valencian Community, which includes Torrevieja and Orihuela Costa, the general ITP rate is commonly 10%. In the Region of Murcia, the general rate is often lower, commonly around 8%. Reduced rates may be available in specific circumstances, but foreign buyers should never assume they qualify without advice based on their personal situation.
As an example, a €250,000 resale apartment in the Costa Blanca area may create an ITP bill of €25,000 at a 10% rate. That is before notary, land registry, and legal fees. In Murcia, the same purchase price at an 8% rate would mean €20,000 in ITP.
New builds: VAT and Stamp Duty
When buying a new residential property directly from a developer, VAT replaces ITP. VAT is generally 10% of the purchase price for a home, garage, or storage room bought as part of the transaction.
Buyers also pay Stamp Duty, known as AJD. The rate is set by the autonomous community, so it differs between the Costa Blanca and Murcia. It is often around 1.5% in the Valencian Community, while Murcia may apply a different rate. Your lawyer or tax advisor should confirm the current percentage before you exchange contracts, especially if you are purchasing off-plan.
For a €250,000 new-build home, 10% VAT alone is €25,000. Add AJD and the other completion costs, and the overall budget is materially higher than the advertised property price.
Other costs due at completion
Not every payment at completion is a tax, but all of them belong in your financial plan. Notary and land registry charges are regulated but vary with the transaction. Legal fees, bank costs, valuation fees, and power-of-attorney arrangements can also apply.
As a practical rule, buyers of resale property in the Valencian Community often budget roughly 12% to 14% above the purchase price for taxes and standard acquisition costs. A new build may require a similar or slightly higher allowance, depending on AJD and professional fees. The right figure for you depends on the home, location, financing, and structure of the purchase.
If you use a mortgage, ask early which costs are covered by the lender and which remain yours. Spanish mortgage rules place many formalization costs on the bank, but valuation charges and other buyer expenses can still arise.
Annual taxes after you own the property
Owning a home in Spain brings recurring costs. The most familiar is IBI, the local property tax charged by the town hall. It is based on the cadastral value, not the market value, and is usually paid once a year.
IBI can vary significantly between municipalities and properties. A compact apartment in Torrevieja may have a modest annual bill, while a larger villa with land, a pool, or a higher cadastral value may cost more. Ask to see the latest IBI receipt before committing to buy. It gives you a more reliable starting point than an estimate.
You may also receive a local waste collection charge, often called basura. The format, amount, and payment timing vary by municipality. Community fees are separate again. They are not a tax, but for apartments, townhouses, and homes on urbanizations they can be one of the most meaningful annual costs. Check the current fee, planned works, and whether the seller has any unpaid community debts.
Non-resident income tax, even if you do not rent
Many overseas owners are surprised by this one. If you are not tax resident in Spain and own a property for personal use, Spanish rules can still create a non-resident income tax obligation. This is based on an assumed income calculated from the cadastral value, rather than on rent you actually receive.
The calculation generally uses 1.1% or 2% of the cadastral value, depending on when that value was last reviewed, followed by the applicable non-resident tax rate. EU and EEA residents and non-EU residents may be taxed differently. The annual return is commonly filed during the following calendar year.
It may be a relatively small bill, but it should not be ignored. A good gestor can prepare this return for you and keep future deadlines organized.
Taxes when you rent out your Spanish home
A holiday home that earns rental income has a different tax profile from a private second home. Non-resident owners must generally declare Spanish rental income, even if rent is paid into a bank account outside Spain.
For non-resident owners who live in the EU or EEA, eligible expenses may generally be deducted before tax, subject to the applicable rules and evidence. Owners resident outside the EU or EEA are commonly taxed on gross income at a higher rate. Rental periods are typically declared quarterly, while the periods when the home is empty can still trigger the imputed income calculation.
This is where good record-keeping matters. Keep invoices for repairs, utilities where relevant, management, insurance, community fees, and other property expenses. A rental management plan should also account for local licensing rules, guest registration obligations, and the difference between short-term tourist lets and long-term rentals. Those rules can change by region and municipality.
If rental income is part of your buying decision, calculate returns after taxes, community fees, management, maintenance, vacancy periods, and licensing requirements. The gross yield in a listing is only the beginning of the conversation.
Taxes when you sell
Sellers can face capital gains tax on the profit made from a Spanish property sale. For non-resident sellers, the buyer normally retains 3% of the sale price and pays it to the Spanish tax authority. This is not automatically the final tax due. The seller later files the relevant return to calculate the actual capital gain and may receive a refund if too much was withheld.
There may also be municipal plusvalía tax, a local tax linked to the increase in the value of urban land during the ownership period. Its amount depends on the municipality, cadastral land value, and period of ownership. It is usually the seller’s responsibility, although the contract should state this clearly.
For buyers, these seller taxes matter because unpaid debts or incorrectly handled paperwork can delay completion. A proper legal review should confirm that IBI, community charges, utility bills, and other liabilities are addressed before title changes hands.
What to check before making an offer
Ask for the latest IBI receipt, cadastral information, community fee statements, and proof that the seller is up to date with payments. If the property is rented or marketed as a holiday rental, verify the license position and the declared use of the home. For new builds, request a written breakdown showing VAT, AJD, and any extras that may not be included in the quoted price.
Tax rules and regional rates can change, and each buyer’s residence status, family circumstances, and purchase structure can affect the outcome. Treat online calculators as a rough starting point, not a final figure. Before you sign a reservation agreement, have a Spanish lawyer or qualified tax advisor confirm the expected costs in writing.
Buying in Spain should feel exciting, not uncertain. At Buy and Sell in Spain, we encourage clients to look at the full financial picture early, so the property you choose still feels right when every cost is on the table.
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