Most British buyers arrive in Torrevieja with a clear budget in mind and discover, a few weeks in, that the sticker price on the property was only part of the story. Between transfer tax, notary and registry fees, and the annual obligations that kick in the moment the deeds are signed, a non-resident buyer should plan for roughly 12% to 14% on top of the purchase price, plus a small annual bill for as long as the property stays in your name.
This guide walks through every tax a non-resident faces when buying, owning and eventually selling a home in Spain, with real numbers on €150,000, €250,000 and €400,000 properties and a focus on the Valencian Community, where Torrevieja, Orihuela Costa and Playa Flamenca sit. If you would rather have someone handle the tax side of your purchase from the offer through to the Land Registry, our conveyancing lawyers in Torrevieja deal with all of this as standard on every case.
Key takeaways before you buy your property
- Budget an extra 12% to 14% on top of the purchase price for taxes and fees at completion.
- Transfer Tax (ITP) at 10% in the Valencian Community is the single biggest cost on a resale property.
- New-build properties carry VAT (IVA) at 10% plus Stamp Duty (AJD) at 1.5% instead of ITP.
- IBI and non-resident income tax (IRNR) are annual, even if you never rent the property out and only visit for two weeks a year.
- Plusvalía and Capital Gains Tax are almost always the seller’s problem, with one important exception where the buyer withholds 3%.
- Since Brexit, British buyers are taxed as non-EU residents at 24% for rental and imputed income, with no deductible expenses.
Why non-residents pay tax differently in Spain
Spain treats you as a non-resident for tax purposes if you spend fewer than 183 days a year in the country. Most British owners of a holiday home fall squarely into this bracket, which triggers a specific set of rules under the Non-Resident Income Tax regime known as IRNR.
The rules are simple in their unfairness. Residents of the EU, Norway, Iceland and Liechtenstein pay a rate of 19% on Spanish-source income and can deduct legitimate expenses. Everyone else, including British owners since 1 January 2021, pays 24% and cannot deduct a single euro of mortgage interest, community fees or maintenance costs from their rental income. That difference alone can double the annual tax bill on a rented Spanish property owned by a British non-resident compared with an Irish or German neighbour.
You will also need a NIE (foreigner identification number) before any tax can be paid in your name. We have a separate walkthrough on how to get your NIE for a Spanish property purchase, because the tax office cannot register you without it.
The taxes you pay when you buy a property
Two things determine what you pay at completion. First, whether the property is a resale or a brand-new build being sold for the first time by the developer. Second, the region where the property sits, since transfer tax rates are set at Autonomous Community level and vary widely across Spain.
ITP for resale properties in the Valencian Community
The Impuesto sobre Transmisiones Patrimoniales, or Transfer Tax, applies to any second-hand property changing hands between private owners. In the Valencian Community the rate is a flat 10% of the higher of the declared price and the reference value (valor de referencia) that the cadastre publishes for every property. The buyer pays, and the deadline is 30 days from the date of the notarised deed.
The reference value catches out a lot of buyers. If you agree a price below what the cadastre thinks the property is worth, the tax office will still calculate ITP on the higher of the two, and the difference is not negotiable at the tax window.
IVA and AJD for new-build properties
New builds sold for the first time by the developer skip ITP entirely. Instead you pay VAT (IVA) at 10% for a home, or 21 per cent if you are buying land or a commercial premises, plus Stamp Duty (Actos Jurídicos Documentados or AJD) at 1.5% in the Valencian Community. In total, a new build costs 11.5% in tax versus 10% for a resale in the same postcode.
Notary, Land Registry and legal fees
Beyond tax, expect another one to one and a half per cent for notary fees, Land Registry inscription and legal representation. Notary and registry charges follow a national scale, so they do not change much between firms. Legal fees, in contrast, vary, and a fixed quote before you sign anything is the sign of a serious firm. If you are still weighing up whether to instruct someone, our note on whether you actually need a lawyer to buy a house in Spain covers the practical side of that decision.
Resale versus new build at a glance
| Cost | Resale property | New build (from developer) |
|---|---|---|
| Main tax | ITP 10% (Valencian Community) | IVA 10% |
| Stamp Duty (AJD) | Included in ITP | 1.5% (Valencian Community) |
| Who pays | Buyer | Buyer |
| When | Within 30 days of signing | At the moment of signing |
| Notary + Registry | ~1% | ~1% |
| Legal fees | ~1% | ~1% |
| Total add-on | ~12% | ~13.5% |
The taxes you pay every year as an owner
The keys land in your hand, the champagne is opened, and Spain quietly starts adding you to two annual tax rolls. Both surprise new owners, and both are non-negotiable.
IBI, the annual council tax
The Impuesto sobre Bienes Inmuebles is the closest thing Spain has to British council tax. Your local town hall charges it once a year, and the amount is calculated as a percentage (usually between 0.4 and 1.1 per cent) of the property’s valor catastral, an official value that is almost always well below the market price. In Torrevieja and Orihuela Costa, IBI bills for a typical two-bedroom apartment tend to sit between €300 and €800 a year.
The town hall does not chase you if the bill goes unpaid abroad. It quietly accumulates surcharges and, eventually, embargoes the property. A direct debit set up at completion solves this once and for good.
IRNR, the tax nobody warned you about
Here is the annual charge that catches almost every non-resident owner by surprise. If you own property in Spain and do not rent it out, Spanish tax law still assumes you enjoy a notional benefit from having a home there, and it taxes you on that imaginary income.
The maths is straightforward. The tax base is 1.1% of the valor catastral (or 2% if the cadastre has not revised your town’s values in the last ten years). That base is then taxed at 24% for British and other non-EU owners, or 19% for EU residents. On a typical Torrevieja apartment with a valor catastral of €80,000, that works out at €80,000 × 1.1% × 24% = €211 a year. You file it via Modelo 210 by 31 December of the year following the tax year.
It is a small bill, but if you skip it for a decade and then try to sell, the tax office will chase every year they can (usually the last four) and add penalties on top.
Wealth Tax for higher-value estates
Non-residents also fall under Spain’s Wealth Tax (Impuesto sobre el Patrimonio) if their assets in Spain exceed €700,000 net of any mortgage. Rates run from 0.2% up to 3.5% on the excess. For a couple who each own half of a €900,000 villa outright, each spouse is under the threshold and nothing is due. For a single owner of a €1.5 million property, it becomes a real annual cost worth planning for.
Rental income tax if you let the property out
If you decide to let the property, rental income becomes taxable in Spain and is declared quarterly on Modelo 210. British owners pay 24% on the gross rent with no deductions allowed. Owners resident in an EU or EEA country pay 19% and can deduct mortgage interest, community fees, IBI, insurance, agent commissions and a slice of depreciation. The tax difference between a British and a French owner on the same €12,000 rental year can easily exceed €1,500.
The taxes involved when you sell your property
Selling is largely the seller’s problem, but two of the taxes involved touch the buyer directly, and it pays to understand who owes what before you sign.
Plusvalía municipal, paid by the seller
Plusvalía is a municipal tax on the increase in the cadastral value of urban land between the day the seller bought and the day they sell. By law the seller pays it, although in some private contracts the parties agree otherwise. Since the Constitutional Court ruling of October 2021, the tax office must offer two calculation methods (an objective formula and one based on the real gain) and charge whichever is lower. If there is no real gain, no plusvalía is due at all.
Capital Gains Tax and the 3% buyer’s withholding
Capital Gains Tax on a Spanish property sale runs at 19% for EU sellers and 24% for non-EU sellers, applied to the difference between the adjusted purchase value and the net sale price. When the seller is a non-resident, the buyer has a specific obligation that trips people up.
The buyer must withhold 3% of the agreed sale price at completion and pay it directly to the Spanish tax office using Modelo 211 within one month. The seller then offsets that withholding against their final Capital Gains bill via Modelo 210. If the property is being bought from a non-resident, this is the buyer’s responsibility, not the seller’s, and getting it wrong makes the property itself liable for the unpaid tax.
What the numbers look like on real properties
The table below shows the completion cost and the first year of ownership for a British non-resident buying a resale property in the Valencian Community at three common price points.
| Cost | €150,000 home | €250,000 home | €400,000 home |
|---|---|---|---|
| Purchase price | €150,000 | €250,000 | €400,000 |
| ITP (10%) | €15,000 | €25,000 | €40,000 |
| Notary and Land Registry (~1%) | €1,500 | €2,500 | €4,000 |
| Legal fees (~1%) | €1,500 | €2,500 | €4,000 |
| Total at completion | €168,000 | €280,000 | €448,000 |
| Extra over the sticker price | +12% | +12% | +12% |
| IBI per year (estimate) | ~€350 | ~€550 | ~€800 |
| IRNR per year, not rented (estimate) | ~€180 | ~€280 | ~€450 |
Swap the resale scenario for a new build and the numbers move by about one and a half percentage points, because IVA at 10% plus AJD at 1.5% slightly exceeds ITP at 10%. On the €250,000 example, that is roughly €3,750 more in tax at completion.
Why Torrevieja is not Málaga and Madrid is not Barcelona
Transfer Tax is set regionally, and the spread across the main areas where British buyers look is significant. Two properties with the same price in Torrevieja and in Madrid trigger very different bills.
| Autonomous Community | ITP rate (general) |
|---|---|
| Valencian Community (Torrevieja, Orihuela Costa) | 10% |
| Catalonia | 10% |
| Andalusia (Málaga, Marbella) | 7% |
| Madrid | 6% |
| Murcia | 8% |
| Balearic Islands | 8% to 13% (sliding scale) |
The Valencian Community sits at the higher end of the scale, which matters when you are comparing a €300,000 property in Torrevieja against a similar one further south in Almería. The gap in Transfer Tax alone can be €9,000, enough to change the shortlist.
Forms, deadlines and the fiscal representative question
The paperwork behind these taxes revolves around a handful of Hacienda forms. Modelo 600 covers ITP and AJD at completion. Modelo 210 covers the annual IRNR filing and any rental income declarations. Modelo 211 handles the 3% withholding when a non-resident sells. Modelo 214 rolls IRNR and Wealth Tax into a single filing for owners who only have one Spanish property.
A non-resident owner is not legally forced to appoint a fiscal representative in most cases, but in practice you want one. The tax office does not send notifications abroad, penalties accrue quickly, and the reference value system now means every filing needs a Spanish-resident professional double-checking the base. Most of our clients ask us to act as fiscal representative on an annual retainer that costs less than a single Ryanair round trip.
Frequently asked questions
Do I still have to pay Spanish tax if I only spend two weeks a year in my Spanish property?
Yes. IBI and IRNR are annual obligations tied to ownership, not to how much time you spend in the country. The tax office will assume the property gives you notional income whether you sleep there for two weeks or two months.
As a British buyer post-Brexit, what tax rate applies to me?
The non-EU rate of 24% applies to your imputed income and any rental income, with no deductions allowed. Before 1 January 2021 you paid 19% and could deduct expenses on rented property. That change alone is the most significant post-Brexit shift for British owners.
Can I be taxed twice, in Spain and in the UK, on the same property?
In practice, no. The Spain–UK Double Taxation Convention means tax paid in Spain on Spanish-source income is credited against your UK liability, so you pay the higher of the two rates once rather than both. You still need to declare Spanish rental income to HMRC on your Self Assessment.
Do I need a Spanish bank account to pay these taxes?
You do not strictly need one for occasional payments, but everyone with a property ends up opening a Spanish account for IBI, community fees, utilities and IRNR direct debits. Trying to run a Spanish property from a British bank account creates constant friction.
What happens if I never file the IRNR return?
The tax office can and does chase back four years of unfiled returns, applying surcharges of up to 20% plus interest. The check often happens at the point of sale, when the buyer’s lawyer asks for proof of tax compliance, and it can hold up completion for months.
Are the taxes and fees I paid when buying deductible when I sell?
Yes. ITP, notary, Land Registry and legal fees paid at purchase are added to the purchase value when calculating your Capital Gain years later. Keeping the original invoices from the moment you buy makes the eventual sale significantly cheaper.
A single number in your budget, before any offer
The single most useful thing a British buyer can do before making an offer on the Costa Blanca is to write a number at the top of the spreadsheet that reads “purchase price × 1.14”. That covers every tax, every fee, and the small buffer for the reference value surprise. From there, IBI and IRNR come in as modest annual costs that a fiscal representative can handle for a few hundred euros a year.
If you would rather not build that spreadsheet yourself, that is precisely what our team handles on every conveyancing case. We calculate the full tax burden on the specific property you are considering, file every form on your behalf and act as your fiscal representative for as long as you own the property. Send us the property details for a fixed quote, or come and see us at our office in Torrevieja if you are already in the area.
