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

Catherine Hughes July 25, 2026 4 min read

Purchase Taxes: What You Pay When You Buy

Spanish property taxes split into two phases: what you pay when you buy, and what you owe each year as an owner. The purchase phase depends entirely on whether you are buying a resale property or new-build.

For resale properties on the Costa del Sol, you pay Impuesto de Transmisiones Patrimoniales (ITP) at 7% of the purchase price in Andalucía. This is a transfer tax that goes to the regional government. On a €500,000 villa in Marbella, that is €35,000 in ITP.

New-build properties face a different regime. You pay Impuesto sobre el Valor Añadido (IVA) at 10% plus Actos Jurídicos Documentados (AJD) at 1.2%. The same €500,000 new villa would cost €50,000 in IVA plus €6,000 in AJD, totalling €56,000 in taxes versus €35,000 on a resale.

The ITP versus IVA distinction matters because developers sometimes blur the line. Off-plan properties that are genuinely new construction pay IVA. Properties that have been completed for more than four years, or have had a previous owner, pay ITP. Your non-resident mortgage broker should flag any ambiguity during the due diligence phase.

AJD: The Document Stamp Duty

Actos Jurídicos Documentados applies to both new-build and resale transactions, though at different rates. New-build buyers pay 1.2% AJD on top of the 10% IVA. Resale buyers pay a lower 1.2% AJD rate, but this is often absorbed into the ITP calculation depending on the notary’s interpretation.

AJD covers the stamp duty on the escritura pública (public deed) and mortgage documentation if you are financing the purchase. The tax applies to the higher of the purchase price or the cadastral value, which prevents buyers from understating the transaction value.

In practice, budget 1.2% of the purchase price for AJD regardless of whether you are buying new-build or resale. This ensures you are not caught short at completion when the notary calculates the final tax position.

Plusvalía Municipal: The Council Capital Gains Tax

Plusvalía Municipal is a council-level capital gains tax that technically falls on the seller, but buyers often negotiate to cover it as part of the deal structure. The tax is calculated on the increase in the cadastral value of the land (not the buildings) during the seller’s ownership period.

The calculation uses a complex formula based on the cadastral value, the number of years owned, and coefficients set by each municipality. For a property owned for 10 years with a land value of €100,000, Plusvalía might range from €2,000 to €8,000 depending on the local coefficients.

Many sellers factor Plusvalía into their asking price, but international buyers should verify who pays it during negotiations. If you agree to cover the seller’s Plusvalía, add 1-3% to your budget depending on how long the seller has owned the property.

IBI: Your Annual Council Tax

Impuesto sobre Bienes Inmuebles (IBI) is Spain’s equivalent of UK council tax, paid annually by the property owner. The rate varies by municipality but typically ranges from 0.4% to 1.1% of the cadastral value per year.

Cadastral values in Spain are often below market values, so IBI tends to be lower than UK council tax in absolute terms. A €500,000 Costa del Sol villa might have a cadastral value of €300,000, generating annual IBI of €1,200 to €3,300 depending on the local rate.

IBI is paid in quarterly instalments or as an annual lump sum, usually through direct debit from a Spanish bank account. Non-resident owners can arrange payment through their property management company or fiscal representative.

Cross-Border Tax Planning for UK and US Owners

UK tax residents who own Spanish property face potential double taxation on rental income and capital gains. Spain charges non-residents 19% capital gains tax on property sales, while the UK taxes worldwide gains at 18% or 28% depending on your total income.

The UK-Spain Double Taxation Agreement (Article 13) gives Spain primary taxing rights on Spanish property gains. UK residents can claim a credit for Spanish tax paid against their UK liability, but you cannot reduce your total tax below the higher of the two rates.

US owners face additional reporting requirements under FBAR and Form 8938 if the property value exceeds certain thresholds. A Spanish property worth more than $50,000 triggers FBAR reporting, while Form 8938 applies to specified foreign financial assets above $200,000 for overseas residents.

Some US buyers consider holding Spanish property through a Spanish limited company to simplify reporting, but this creates corporate tax obligations in Spain and may not reduce the overall tax burden. The company pays 25% corporation tax on rental profits and property gains, while distributions to US shareholders face further taxation.

Wealth Tax Considerations

Spain’s Impuesto de Patrimonio (wealth tax) applies to worldwide assets for Spanish tax residents, and Spanish-situs assets for non-residents. The tax starts at €700,000 of net wealth, with rates rising to 3.5% on assets above €10.7 million.

Non-resident property owners only pay wealth tax on their Spanish assets, but this includes the full value of Spanish property minus any Spanish mortgage debt. A €800,000 Costa del Sol villa with a €300,000 Spanish mortgage creates a €500,000 wealth tax base.

However, Andalucía offers a 100% wealth tax reduction for residents, and many non-residents can structure their affairs to minimise exposure. The key is understanding whether your total Spanish assets exceed the €700,000 threshold after deducting allowable debt.