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Spain is one of Europe’s most active real estate markets for foreign buyers. In 2024, foreign nationals accounted for over 15% of all residential property purchases in Spain — with British, German, French, Dutch, and American buyers among the most active. But buying, holding, or selling Spanish real estate as a non-resident triggers a specific set of tax obligations that differ significantly from those of Spanish nationals. Getting these wrong is expensive.
This guide covers every tax a foreign real estate investor in Spain needs to know: from the taxes on purchase and holding to the treatment of rental income and capital gains on exit — and the structures that can make the investment more efficient.
Taxes when buying property in Spain as a foreigner
New property: VAT (IVA) + stamp duty (AJD)
Buying a new property directly from a developer is subject to:
- VAT (IVA): 10% on residential property; 21% on commercial property and land
- Stamp duty (Actos Jurídicos Documentados — AJD): 0.5% to 2% depending on the autonomous community
Resale property: Transfer tax (ITP)
Buying a second-hand (resale) property from a private seller is subject to Impuesto sobre Transmisiones Patrimoniales (ITP). Rates vary by autonomous community:
- Andalusia: 7%
- Madrid: 6%
- Catalonia: 10%
- Valencia: 10%
- Balearic Islands: 8–13% (graduated scale)
The ITP is calculated on the reference value (valor de referencia) published by the Catastro — a Ministry of Finance database of property values used as the minimum taxable base since 2022. If the actual purchase price is higher than the reference value, ITP is calculated on the higher price.
Notary, registry, and professional fees
Additional purchase costs typically include notary fees (0.2–0.5% of the purchase price), land registry fees (0.1–0.25%), and legal/advisory fees (0.5–1.5%). Total acquisition costs for a foreign buyer in Spain typically range from 8–13% of the purchase price, depending on the region and property type.
Taxes while holding Spanish property as a non-resident
Imputed income tax (renta imputada)
Non-residents who own a Spanish property that is not rented out and is not their primary residence must pay an imputed income tax under the IRNR framework. The taxable base is 1.1% of the cadastral value (valor catastral) if the value has been updated in the last 10 years, or 2% if not updated. The tax rate is 19% for EU/EEA residents and 24% for non-EU residents. This is filed annually via Modelo 210.
Rental income tax (IRNR on rents)
Rental income from Spanish property is taxable in Spain regardless of the owner’s residency:
- EU/EEA residents: 19% on net rental income (expenses can be deducted — mortgage interest, maintenance, property management fees, depreciation)
- Non-EU residents: 24% on gross rental income (no expense deduction allowed)
Rental income must be declared quarterly via Modelo 210. Failure to file results in automatic surcharges.
Local property tax (IBI)
IBI (Impuesto sobre Bienes Inmuebles) is a local property tax paid annually to the municipal authority. Rates typically range from 0.4% to 1.1% of the cadastral value, depending on the municipality.
Wealth tax
Non-resident individuals who own Spanish property or other Spanish assets with a net value above €700,000 (after applying the €300,000 primary residence exemption where applicable) are subject to Spanish wealth tax on their Spanish assets. Rates range from 0.2% to 3.5%. Key regional differences: Madrid residents pay 0% (100% rebate); Andalusia offers a 100% rebate up to €1 million in assets. The Solidarity Tax applies above €3 million net wealth regardless of regional rebates.
Tax on selling Spanish property as a non-resident
Capital gains tax (IRNR on plusvalías)
Gains from the sale of Spanish property are taxable in Spain for non-residents at a flat rate of 19%. The gain is calculated as the difference between the sale price and the acquisition price (plus allowable costs: notary, registry, ITP or VAT paid on purchase, improvement works, and professional fees).
The 3% withholding on property sales
When a non-resident sells Spanish property, the buyer is legally required to withhold 3% of the purchase price and pay it directly to the AEAT on behalf of the seller. This withholding is an advance payment on the non-resident’s capital gains tax. If the actual tax owed (19% of the gain) is less than the 3% withheld, the seller can claim a refund — via Modelo 211 (declaration of the withholding by the buyer) and Modelo 210 (capital gains declaration by the seller).
Municipal capital gains tax (plusvalía municipal)
In addition to the national capital gains tax, selling property triggers a local municipal tax — the Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana (IIVTNU), known as plusvalía municipal. This tax is based on the increase in the official land value (not the actual market gain) during the period of ownership. Rates and calculation methods vary by municipality. Since a 2021 Constitutional Court ruling, sellers are not required to pay the plusvalía if they make a real loss on the sale.
Investment structures for Spanish real estate
Direct personal ownership
The simplest structure — the foreign individual owns the property directly. Tax treatment follows the IRNR rules above. Advantages: simple. Disadvantages: wealth tax exposure, no expense deduction for non-EU residents on rental income, and potential inheritance tax implications.
Spanish SL holding company
Owning Spanish property through a Spanish SL can offer advantages for commercial property or portfolios: rental income taxed at 25% CIT (with full expense deduction), no personal wealth tax on shares (though corporate assets may still be included), and more flexible succession planning. However, selling the SL rather than the property triggers different tax rules — and may not eliminate the underlying real estate tax exposure for the buyer.
SOCIMI (Spanish REIT equivalent)
For institutional investors, the SOCIMI (Sociedad Cotizada Anónima de Inversión en el Mercado Inmobiliario) regime offers 0% corporate income tax on qualifying real estate income, provided that 80%+ of assets are real estate and at least 80% of income is distributed as dividends. A minimum portfolio size and listing requirement apply.
Frequently asked questions
Do foreigners pay more tax than Spanish residents on property?
In some respects, yes. Non-EU residents cannot deduct rental expenses under the domestic IRNR rules (24% on gross income vs. 19% on net income for EU residents). The 3% withholding on sale applies to all non-residents. And wealth tax applies to Spanish assets for non-residents even in communities with regional rebates for residents. Double taxation treaties may mitigate some of these differences — particularly for rental income and capital gains.
Can I reclaim the 3% withholding on a property sale?
Yes. If your actual capital gains tax (19% of the net gain) is less than the 3% withheld (which happens when the gain is small or when acquisition costs are high), you can claim the difference as a refund from the AEAT by filing Modelo 210 within 4 years of the sale.
Are there tax incentives for renovating Spanish property?
Yes. Since 2021, Spain has introduced tax deductions for energy efficiency improvements on rental properties — up to 60% of renovation costs under the Ley de Medidas de Apoyo a la Rehabilitación. These apply to resident landlords filing IRPF. Non-resident landlords (IRNR filers) do not currently benefit from these deductions under the standard regime, though EU residents can offset qualifying costs against their rental income.
Real estate investment in Spain involves multiple layers of taxation that interact with your personal residence status, nationality, and the structure you use. At Capital Auditors & Consultants, we advise foreign real estate investors on tax-efficient structures, IRNR compliance, and capital gains planning. Contact our team before you buy, hold, or sell.
