Spain remains a leader in attracting foreign property investment in 2025 due to its warm climate, developed infrastructure and sustainable economy. Tax legislation continues to play a key role in ensuring transparent transactions and favourable investments. Property taxes in Spain affect every stage: from purchase to sale. Competent management of rates allows you to minimise costs, optimise returns and avoid financial risks.
Main types of property taxes in Spain
The main reasons for the popularity of Spanish real estate – favourable tax rates, support for foreign investors at the state level and growing demand in tourist centres. Cities such as Barcelona, Málaga and Alicante offer unique conditions for investing in housing for both personal use and rent.
Property purchase tax in Spain: rates and peculiarities
The Kingdom sets commissions on each sale and purchase transaction – the percentages depend on the type of property, region and its purpose. In 2025, the property transfer tax (ITP) remains mandatory for the secondary market, with rates ranging from 6% to 11%:
- Madrid and Catalonia: 10% as standard.
- Andalusia: reduced rate of 8% for properties up to €400,000.
- Valencia: range 6-10% depending on the purpose of the property.
Value Added Tax (IVA) is levied on primary residences. Its standard rate is 10 per cent and 21 per cent for luxury properties over €1 million. In addition, stamp duty (AJD) is paid – 1-2% of the transaction amount.
Calculation example
When buying a flat in Valencia for 300,000 euros:
- VAT (IVA): €30,000.
- Stamp Duty (AJD): EUR 4,500 (1.5 per cent).
- Final Costs: 34,500 euros.
Buyers must also take into account notary and registration fees, which average 1-2% of the object’s price. As a result, the tax burden on the future owner may amount to up to 15% of the total value of the property.
Property tax: what is important for homeowners to know
Annual property tax (IBI) is payable by owners of residential and commercial property in Spain, including non-residents. Rates vary from 0.4% to 1.1% depending on the region, type of property and its cadastral value.
Examples of rates by region:
- Madrid: 0,5%.
- Barcelona: 0.8%.
- Malaga: 0.7%.
A flat in Alicante with a cadastral value of €200,000 is subject to a levy at a rate of 0.8%. The total annual fee will be 1600.
For commercial properties, the rate reaches 1.1 per cent, which increases the tax burden on owners. Municipalities regulate the percentages annually, which requires property owners to regularly monitor changes.
How are taxes calculated in Spain on the sale of property? Obligations for residents and non-residents
The sale of flats and houses on the peninsula is subject to capital gains tax (CGT). The rate is progressive for residents:
- 19% on increments up to €50,000.
- 21% – from EUR 50 001 to EUR 200 000.
- 23% – over €200,000.
Non-residents pay a flat fee of 24% of all capital gains.
Benefits and tax deductions for foreign investors
Spain provides a wide range of tax benefits for foreigners, which makes property investment even more attractive. One of the key advantages is exemption from double taxation. Thanks to agreements signed with more than 80 countries, foreign investors can avoid paying similar fees both in the Spanish state and at home. This is particularly relevant for non-residents who receive income from renting or selling properties.
Long-term rentals are also accompanied by tax deductions. Owners have the opportunity to reduce the taxable base by 60%, which significantly reduces the financial burden. For example, for the owner of a flat in Barcelona, which is rented out for 1,200 euros per month, the liability can be reduced by several hundred euros per year.
Investors who reinvest the proceeds from the sale of real estate in new housing in Spain have an additional tax benefit. In such cases, the owners are exempt from capital gains tax (CGT), which allows them to save large amounts of money for further investment.
Golden Visa programme: how to reduce property taxes
“Golden Visa” provides investors with the opportunity to obtain a residence permit for the purchase of properties valued at 500,000 euros or more. This status simplifies tax obligations, including reduced rates, and also opens access to participation in reinvestment programmes. Property owners in tourist areas of Spain, such as Málaga or Costa Blanca, receive additional benefits in the form of a 25% reduction in annual property tax if the property is rented out.
For example, the purchase of a flat in Malaga, previously subject to a commission of 1200 euros, allows you to reduce the payment to 900 euros, if you comply with all the conditions of the programme. Such measures encourage foreigners and promote interest in the Spanish property market, providing advantages for long-term financial planning.
How to manage tax expenditure efficiently?
Effective management of tax liabilities is an integral part of any investment strategy. Utilising tax incentives, proper asset allocation and timely payment of all compulsory levies can not only reduce costs, but also avoid penalties.
Understanding what property taxes apply in Spain helps residents and non-residents to minimise risks and maximise returns. Consultation with professional lawyers and tax advisors ensures that all obligations are fully controlled.
Investing in properties on the peninsula in 2025 continues to attract attention due to the stable economy in the country, developed infrastructure and favourable tax conditions. Commission management is not just an obligation for investors, but an opportunity to maximise returns and successfully realise financial goals.
The property market in Madrid has its advantages and disadvantages. All aspects of the buying process must be considered in order to make an informed decision.
Buying property in Madrid is an investment that offers great opportunities for life and business. The Spanish capital offers a variety of properties, a stable market and a high quality of life. To understand how to buy property in Madrid, you need to follow a clear plan of action: