Cost of living in Valencia: whether it’s worth moving in 2025

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%:

1. Madrid and Catalonia: 10% as standard.
2. Andalusia: reduced rate of 8% for properties up to €400,000.
3. 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:

1. VAT (IVA): €30,000.
2. Stamp Duty (AJD): EUR 4,500 (1.5 per cent).
3. 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:

1. Madrid: 0,5%.
2. Barcelona: 0.8%.
3. 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:

1. 19% on increments up to €50,000.
2. 21% – from EUR 50 001 to EUR 200 000.
3. 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.

Do you dream of living on the Mediterranean coast? Or are you planning to make Spain your second home? More and more Russians are turning to property in Spain as a real alternative for living and investment. Thanks to a stable economy, low interest rates on mortgage loans and unique conditions for foreign buyers, buying a flat in Spain has become possible.

Why buying property in Spain is a good investment?

Wondering whether to buy a flat in Spain? The answer is unequivocal: yes! Since the financial crisis in 2008, house prices in the country have fallen significantly, but since 2015 the market has started to recover. In 2024, property in Spain is showing steady growth, especially in popular resort and urban areas. The average price per square metre in major cities, such as Barcelona and Madrid, is around 3,000 euros, and in coastal areas – from 1,500 to 2,500 euros.

For Russians buying property in Spain not only opens up prospects for personal residence, but also allows you to get rental income. It is particularly profitable to rent out accommodation in popular tourist destinations such as Mallorca, the Canary Islands and the Costa Brava. In some areas, rental income can be up to 6-8% per annum.

Which region of Spain is worth buying a flat in?

If you want to live in a cultural and dynamic atmosphere, Barcelona is the perfect choice. The cost of housing here will be higher, but you will have access to unique cultural events, a stunning climate and a well-developed infrastructure. The price per square metre in Barcelona varies from 3500 to 6000 euros in the centre.

If you are looking for a place with more affordable prices, but no less picturesque and with good rental prospects, look at Valencia and Alicante. In these cities, the cost of housing is much lower than in the capital, while the climate and quality of life are not inferior. Valencia, for example, can offer flats at prices starting from 1500 euros per square metre, and the cost of rent reaches 7-10% per annum.

In turn, if you are attracted to a more relaxed and cosy atmosphere, then you can consider places such as Costa Brava, where housing prices start from 1200 euros per square metre. In addition, you can have a holiday here all year round – thanks to the warm climate.

Important steps when buying a property in Spain

Buying a flat in Spain is not just about signing contracts. To make everything go smoothly, you need to follow all the steps carefully:

1. Choose a property: start by looking for accommodation through agencies or specialised websites such as Idealista or Fotocasa. Make sure that the property you choose is in good condition and corresponds to the advertised price.
2. Draw up a contract: Once you have found a suitable home, you need to sign a preliminary sales contract. It fixes the price and terms of the transactions. At this stage, as a rule, a deposit is paid (from 1 to 10% of the flat’s value).
3. Obtain a NIE: A Spanish tax number (NIE) will be required to complete the transaction. It is compulsory for all foreign nationals and is used for paying taxes and legal transactions.
4. Work with a notary: when all the documents are ready, the deal is signed at the notary’s office. This is a mandatory step, as in Spain property transactions are only considered legal after notarisation.
5. Register the property in the registry: the last step is to register the purchase in the property registry.

Don’t forget that if you plan to take out a mortgage to buy a flat in Spain, it will take extra time to get approval.

How to correctly estimate the value of a flat in Spain

Valuation is an important consideration that directly affects the purchase. To avoid overpayment, there are several factors to consider:

1. Property type: new buildings are more expensive than secondary housing. The average price per square metre in new buildings is about 3000 euros, while for flats on the secondary market you can find offers from 1500 euros per square metre.
2. Location: the city centre is always more expensive. For example, a flat in the heart of Barcelona will cost twice as much as a similar property on the outskirts.
3. The condition of the property: if the flat requires repair, its price will be lower. However, do not forget that repair costs may amount to 20-30% of the value of the property.
4. Additional costs: in addition to the cost of the home itself, it is worth considering taxes, registration fees, and the costs of a notary and lawyer. On average, these costs amount to about 10-15% of the cost of housing.

Advantages and risks of buying property in Spain

Like any investment decision, buying a flat in Spain has its pros and cons:

Benefits:

1. High liquidity: Spain is a popular tourist country, so flats located in tourist areas are always easy to rent.
2. Accessibility for foreign citizens: Spain provides easy conditions for foreigners to buy property. The purchase process is quite transparent and does not require any special complications.
3. Low interest rates: Mortgage rates for property purchases range from 2 to 4%, which is much lower than in some other countries.

Risks:

1. Legal complexities: sometimes there are cases with legal disputes over real estate. It is therefore worth choosing agencies and notaries with a good reputation.
2. Taxes and fees: don’t forget about mandatory taxes. For example, when buying a home, pay property transfer tax (6 to 10 per cent of the value of the home) and annual tax obligations.

How to apply for a mortgage on a flat in Spain

Consider a few important factors:

1. Who can get a mortgage: foreign buyers can qualify for a mortgage in Spain, but they will need an NIE, a stable income and proof of financial solvency.
2. Mortgage terms: banks usually lend for up to 30 years. The maximum loan amount is up to 70-80% of the value of the flat for non-residents.
3. Interest rates: from 2.5 per cent to 3.5 per cent. It is important to carefully review the terms and conditions as this is a long-term commitment.
4. Documents: you will need proof of income, a tax return, and copies of your passport and NIE.

Conclusion

Buying a flat in Spain is easy if you do it responsibly. Take into account all the steps, from choosing a region to arranging a mortgage, and do not forget about the legal aspects. Following the step-by-step plan, you will not only be able to choose a suitable home, but also to make a profitable purchase, which will bring pleasure and financial stability.