Ongoing Taxes & Costs of Owning a Property in Spain – Guide for Expats

Buying a home in Spain is a big step, but the financial responsibilities don’t end after the purchase. Whether you own a holiday home, rental property, or permanent residence, there are ongoing taxes, utility bills, and maintenance costs that you need to budget for.

At 247 Expat Insurance, we help expats protect their homes with comprehensive home insurance, ensuring peace of mind against unexpected events. This guide explains the yearly taxes, utility bills, and hidden costs of owning property in Spain.

Property Taxes in Spain – What Expats Need to Know

• All property owners in Spain must pay annual property taxes—even non-residents.
• The amount depends on whether you are a resident or non-resident, and whether the property is used as a main home, holiday home, or rental property.
• Failing to pay these taxes on time can result in penalties and legal issues.

Understanding your tax obligations in advance will help you avoid unexpected costs.

Annual Property Taxes in Spain

1. IBI (Impuesto sobre Bienes Inmuebles) – Local Property Tax

• IBI is a municipal tax paid annually to the local town hall.
• It’s calculated based on the cadastral value (valor catastral) of the property, which is usually lower than the market value.
• IBI rates vary by location, typically ranging from 0.4% to 1.3% of the cadastral value.

For a property with a cadastral value of €150,000 in Alicante, the IBI tax would be around €825 per year.

2. Non-Resident Income Tax (IRNR) – For Non-Residents Who Own Property

• If you are a non-resident who owns property in Spain but do not rent it out, you must pay Impuesto sobre la Renta de No Residentes (IRNR).
• This is a “deemed rental income tax”, even if you don’t actually rent your property.
• The tax is calculated as 2% of the cadastral value (or 1.1% if the value was updated in the last 10 years).
• The tax rate depends on your country of residence:

Example: If your Spanish holiday home has a cadastral value of €150,000, your taxable income is 2% of this (€3,000). If you are a UK resident, you pay 24% tax (€720 per year).

3. Rental Income Tax – If You Rent Out Your Property

• If you rent out your Spanish property, you must declare your rental income and pay tax.
• Tax rates for rental income:
  • EU/EEA Residents: 19% (can deduct expenses).
  • Non-EU Residents (e.g., UK, USA): 24% (no deductions allowed).
• Expenses that EU/EEA residents can deduct include:
  • Property management fees.
  • Repairs & maintenance.
  • Utility bills (if paid by the owner).
  • Insurance premiums (home & landlord insurance).

If you rent out your Spanish property for €12,000 per year, a UK or U.S. owner would pay €2,880 in tax (24%).

4. Wealth Tax (Impuesto sobre el Patrimonio) – Only for High-Value Properties

• Wealth tax applies if your Spanish property and assets exceed €700,000 (or €1,000,000 in some regions).
• Tax rates range from 0.2% to 3.5%, depending on the total property value.

💡 If your Spanish assets are worth more than €700,000, check if you need to pay wealth tax.

Additional Ongoing Costs of Owning a Property in Spain

5. Community Fees – If You Own a Property in a Gated Complex or Apartment

• If your property is in a gated community, apartment complex, or urbanization, you’ll pay monthly community fees for shared services like:

• • Swimming pools.
  • Security.
  • Maintenance of common areas.

• Fees vary, but typically range from €50 to €250 per month.

Luxury developments with 24/7 security and pools have higher fees.

6. Utility Bills – Electricity, Water & Internet

• Electricity (Luz) – Around €50-150 per month, depending on usage.
• Water (Agua) – Around €20-50 per month.
• Internet & TV – Packages cost €30-80 per month.

Electricity prices in Spain fluctuate, so check for off-peak tariff options to save money.

7. Home Insurance – Protection for Your Investment

• Home insurance is highly recommended (and sometimes required for mortgages).
• Covers damage from fire, floods, theft, and liability claims.
• Basic plans start at €120 per year, but premium coverage can cost up to €500 per year.

At 247 Expat Insurance, we offer tailored home insurance plans for expats in Spain.

8. Waste Collection & Local Taxes (Basura Tax & Plusvalía Tax)

• Basura Tax (Rubbish Collection Fee) – Around €50-150 per year, paid to the local council.
• Plusvalía Tax (Capital Gains Tax on Property Sales) – Applies if you sell the property and there has been an increase in land value.

Basura tax is a small but mandatory fee for property owners.

Total Estimated Annual Costs of Owning a Property in Spain

Budget around 2-4% of the property’s value per year for ongoing costs.

How 247 Expat Insurance Can Help Protect Your Spanish Property

Owning property in Spain comes with responsibilities—protect your investment with the right insurance. 247 Expat Insurance offers:

• Home Insurance – Covers fire, theft, and property damage.
• Landlord Insurance – If you rent out your property.
• Health Insurance – Required for residency applications.
• Car Insurance – If you own a vehicle in Spain.

📩 Get a free quote today!

Disclaimer

Taxes and costs vary by region and may change over time. This article is for informational purposes only and does not constitute legal or financial advice. Always consult a tax professional.