Property Taxes in Spain: Highest To Lowest

26 April, 2023 | Alba Tebar

In Spain, you’ll have to pay different taxes depending on whether you are a resident or a non-resident, ranging between 8% and 11’5%. That’s why it is very important for you to carefully inform yourself about this topic, especially if you are from another country.

As we have said, there is no unique property tax in Spain. Depending on different factors, you’ll end up paying different amounts of money when it comes to taxes. Specifically, they will mostly depend on whether the property is new built or it has already been owned by another person.

Besides, property taxes in Spain does not only vary depending on the type of property but on the region. You will not pay the same taxes if you are living in Barcelona (region of Catalonia) than if you are living in Mallorca (region of Islas Baleares). That happens because of the political organization of Spain, in which each region has a certain degree of self-government and self-management apart from the statal one. By this way, each region can decide on some taxes, including property ones.

Highest and lowest property taxes according to regions

If we focus on the different property taxes you have to pay depending on the region where your house is located, you have to be aware of the differences you might find. Let’s explore which region has the highest tax and in which one you’ll find the lowest one.

  • Basque Country (País Basco). In that region, located in the north of the peninsula, you’ll find the highest property taxes in the country. We are talking about IBI (Property Ownership Tax, known in Spanish as “Impuesto sobre Bienes Inmuebles”) which has an average rate of 1’35%. Madrid, that also has a pretty high property tax, stays with an average rate of 0’76%.

  • Canary Islands (Islas Canarias). These subtropical islands from Spain have the privilege of having the lowest property tax of the whole country, with an average rate of 0’43%. Murcia and Extremadura are not that far away, with property taxes of 0’45% and 0’46%, respectively.

Owning property taxes

If you own a property in Spain, you’ll have to pay special attention to the following taxes:

Property Ownership Tax (IBI in Spanish)

This is a tax levied by the local town or council to the ownership of an apartment, a house, a commercial property or even a land. It is calculated based on the cadastral value (which is set by the town hall), and it is usually lower than the market value of the property.

It can vary depending on the type of property you have or its location, but it mostly will be in a range between 0’4% to 1’1%; with an average rate around 0’5%.

Finally, it is important to remember that there is no distinction whether you, as an owner, are a resident or a non-resident.

Refuse Collection (Extracciones municipals in Spanish)

These are some small taxes that you must pay once a year at the council, in order to provide funds for organizing and providing collection of household waste, street cleaning, and the maintenance of public areas. Approximately, you will pay around 80 euros for a medium apartment.

Personal Income tax

Each month of May, residents in Spain do their annual Rental Declaration, which includes the income gained by renting their property. For non-residents in Spain, it is also compulsory to declare earnings on their property and pay an annual income tax according to their property characteristics, whether the property is rented out or not. This works this way:

  • Rented out: it’s a 19% tax in case you are a EU or a EAA member; and a 24% tax in case you come form any other country.

Remember, before the 20th day of every January, April, July and October, you’ll need to pay a part of the tax!

Imputed income tax

However, if your property remains empty during all the year, or at least for a long part of it, you must pay the so-called Imputed Income Tax. This taxes the potential income your property could produce if it was rented.

Again, if you are a EU or EAA member, you’ll only have to pay a tax of a 19%. On the other hand, if you are not a EU or a EAA citizen, the tax you’ll have to pay goes up to 24%.

In case you want to discover how is Imputed Income tax calculated, here we explain it to you: you must multiply the cadastral value by a percentage:

  • 2% if the rateable value has not been updated within the last 10 years
  • 1’1% if the rateable value has been updated within the last 10 years

Wealth Tax

And last but not least, in Spain there is also the Wealth tax, the one that takes into account the total assets owned by individuals, usually above a certain threshold. Its goal is to reduce income and wealth inequity by requiring the richest individuals to contribute more to society than the ones that have less.

While residents in Spain will be compulsory taxed on their worldwide assets, non-residents might not have to pay. This will depend on the value of their Spanish property. In that sense, tahere is a general exemption of 700.000€ which is not subject to wealth tax.

Anyways, depending on the region, there are different taxes, so it is important to check out which characteristics are applied to your location. For further information regarding this topic, check out this governmental website, or ask for advice to our Hipotecasplus team!

Remember, in Hipotecasplus we are expert mortgage brokers that will help you settle down in Spain and will guide you throughout the whole process. We can guarantee you that we’ll find the perfect house and the perfect mortgage for you and your family! What’s more: we will not stop until we are 100% sure that you have everything at the best price and with the maximum rigor and transparency possible. Do not hesitate to contact us for further information! We will be delighted to receive you!