Spanish Property Taxes Explained: ITP, IVA, AJD, Plusvalía, and IBI

Acquisition Taxes: What You Pay When You Buy

When you buy property in Spain, the tax you pay depends on whether you’re buying new-build (off-plan or recently completed) or resale property. This distinction determines which tax regime applies and can mean a difference of several thousand euros on a typical Costa del Sol purchase.

For resale properties in Andalucía, you pay Impuesto de Transmisiones Patrimoniales (ITP) at 7%. The Junta de Andalucía reduced this rate from 8% in recent years, making resale purchases more attractive. On a €400,000 villa in Marbella, that’s €28,000 in ITP.

New-build properties follow a different path. You pay Impuesto sobre el Valor Añadido (IVA) at 10% plus Actos Jurídicos Documentados (AJD) at 1.5%. The same €400,000 new villa would cost €40,000 in IVA plus €6,000 in AJD, totalling €46,000 in acquisition taxes.

The €18,000 difference between resale (€28,000) and new-build (€46,000) taxes often surprises buyers. Factor this into your budget when comparing properties, especially if you’re weighing a resale villa against an off-plan development.

IBI: Your Annual Property Tax Bill

Impuesto sobre Bienes Inmuebles (IBI) is Spain’s equivalent of council tax, paid annually to your local municipality. The rate varies by town, but expect 0.4% to 1.1% of your property’s cadastral value per year.

Cadastral values in popular Costa del Sol areas have risen significantly. A €500,000 market-value apartment in Estepona might have a cadastral value of €200,000, generating an annual IBI bill of €800 to €2,200 depending on the municipal rate.

You receive your IBI bill (recibo del IBI) in spring, with payment typically due by November. Many buyers set up direct debit through their Spanish bank to avoid late payment penalties of 5% to 20%.

Plusvalía Municipal: The Capital Gains Tax on Sale

When you sell Spanish property, you face Plusvalía Municipal, a local tax on the theoretical increase in land value during your ownership period. This applies regardless of whether you actually made a profit.

The calculation uses standardised annual increases (typically 2% to 4% per year) multiplied by your property’s cadastral land value. Own a Costa del Sol property for five years, and you might face Plusvalía of €2,000 to €8,000 on sale, depending on the land value and municipal rates.

Some municipalities offer reductions for long-term ownership or family circumstances. Marbella, for example, applies different rates for properties held over 10 years. Your Spanish property lawyer should calculate the estimated Plusvalía before you complete any sale.

Wealth Tax Considerations for Property Owners

Spain’s Impuesto de Patrimonio (wealth tax) applies to your worldwide assets if you’re Spanish tax resident, or your Spanish assets if you’re non-resident. Andalucía offers a 100% discount on wealth tax for residents, but non-residents still face the full rates.

The tax kicks in when your Spanish property assets exceed €700,000. Rates start at 0.2% and rise to 3.75% on assets over €10 million. A non-resident owning a €1.2 million Sotogrande villa would pay wealth tax on €500,000 (the amount above the €700,000 threshold), generating an annual bill of around €1,000.

This creates a planning point for high-value purchases. Spreading ownership between spouses can double the €700,000 threshold, potentially eliminating wealth tax entirely on properties worth up to €1.4 million.

Off-Plan vs Resale: The Tax Comparison

The tax difference between off-plan and resale purchases becomes starker on higher-value properties. Consider a €800,000 purchase in Benahavís:

Resale property: 7% ITP = €56,000

New-build property: 10% IVA (€80,000) + 1.5% AJD (€12,000) = €92,000 total

That €36,000 difference represents nearly 5% of the purchase price. However, new-build properties often include modern specifications, warranties, and energy efficiency that resale properties lack. The tax saving on resale purchases should be weighed against these practical benefits.

Some developers offer to absorb the IVA on new-build sales, effectively reducing your tax burden to just the 1.5% AJD. Always confirm whether advertised prices are inclusive or exclusive of taxes.

Non-Resident Tax Obligations

Non-resident property owners face additional annual reporting requirements. If you rent out your Spanish property, you must file Modelo 210 by December 31st each year, declaring rental income and paying tax at 24% for EU residents or 47% for non-EU residents.

Even if you don’t rent the property, you must declare an imputed rental income (typically 1.1% to 2% of cadastral value annually) and pay tax on this deemed benefit. A €300,000 cadastral value property generates imputed income of €3,300 to €6,600, creating a tax bill of €792 to €1,584 for EU residents.

These obligations continue for as long as you own Spanish property, making annual compliance essential to avoid penalties and interest charges.

How We Can Help

Spanish property taxes involve multiple rates, thresholds, and filing requirements that vary by property type and buyer residence. Our newsroom publishes regular updates on tax changes affecting Costa del Sol buyers. When you’re ready to calculate the total cost of ownership, browse listings to see how these taxes apply to specific properties and locations.