Spain Property Tax Guide 2026 — IBI, Plusvalía & Rental Income

Overview

• Municipal taxes: Spanish municipalities levy the IBI (annual property tax) and the Plusvalía (municipal land value gain tax on property sales). These are administered by each ayuntamiento (town hall).
• Regional taxes: The autonomous communities set the rates for ITP (property transfer tax on secondary/resale homes) and AJD (stamp duty on new-builds and formal documents).
• State taxes: Rental income and capital gains on property are taxed under the state IRPF (personal income tax). Non-residents are taxed under IRNR (Non-Resident Income Tax).

IBI — Impuesto de Bienes Inmuebles

• Annual property tax: The IBI is an annual municipal tax on property ownership. It is calculated based on the valor catastral (cadastral value) of the property, which is generally lower than market value. The valor catastral is updated periodically by the Catastro (the Spanish Land Registry).
• Rate — 0.4% to 1.1%: The IBI rate is set by each municipality. Urban properties are typically taxed between 0.4% and 1.1% of the valor catastral. The exact rate depends on the municipality's budget needs and the category of the property (urban, rural, or special characteristics).
• Liability: The IBI is payable by the property owner (persona titular del derecho real de superficie, usufructuary, or owner) as of 1 January each year. Payment is typically made annually or semi-annually (depending on the municipality's arrangements). Late payment attracts surcharges of 5% to 20%.

Plusvalía Municipal (IIVTNU)

• Municipal land value increase tax: The Plusvalía Municipal (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana — IIVTNU) is a tax on the increase in value of urban land that occurs when a property is sold, inherited, or gifted.
• Calculation: The tax is calculated based on the increase in the cadastral value of the land (not the building) over the period of ownership. The maximum period is 20 years. The formula uses the land's cadastral value multiplied by a coefficient set by each municipality based on the number of years held.
• Recent reform: Following the Constitutional Court rulings, the calculation method was reformed. The taxable base is now capped at the actual gain realised, and the taxpayer can choose between the objective calculation (based on years held) and the real gain method (actual sale price minus purchase price of the land component).

ITP — Impuesto de Transmisiones Patrimoniales

• Secondary homes (resale): The purchase of a resale home (second-hand property) is subject to ITP rather than VAT. The rate is set by each autonomous community and typically ranges from 6% to 10% of the purchase price (or the real value, if higher).
• Regional rates: Madrid: 6% (general), 4% for young people under 35 buying their first home (with income limits). Cataluña: 10% (general), 5% for young people and certain social housing. Andalucía: 7% (general), reduced rates for young buyers and families. Comunidad Valenciana: 10% (general), 8% for young people.
• Payment deadline: ITP must be paid within 30 business days of the date of the deed of sale (escritura pública). Late payment triggers surcharges and interest.

AJD — Actos Jurídicos Documentados

• New-build properties: The purchase of a new-build property from a developer is subject to VAT (IVA) at 10% on the sale price, plus AJD (stamp duty) on the deed of purchase. The AJD rate is set by each autonomous community, typically 0.5% to 1.5% of the property value.
• Mortgage deeds: AJD also applies to the formalisation of mortgage loans (the escritura de préstamo hipotecario). The rate is 0.5% to 1.5% of the mortgage amount, depending on the region. Some regions have reduced or eliminated AJD on mortgages for young buyers or first homes.

Rental Income Tax

• Residential rental income: Rental income from property is included in the IRPF general tax base and taxed at progressive rates (19–47%). The net rental income (ingresos netos — gross rent minus deductible expenses) is included in the general income of the taxpayer.
• Deductible expenses: Owners can deduct: (a) mortgage interest (up to the lower of the rental income or, if not enough, €9,015.11 per year for the main property), (b) community fees, (c) IBI and other municipal taxes, (d) repairs and maintenance (not capital improvements), (e) insurance premiums, (f) depreciation of the property (3% per year of the building value, excluding land value), (g) management fees to real estate agents, (h) utilities paid by the owner, (i) bad debt provisions.
• Reduction for long-term lets: A 60% reduction (reducción por arrendamiento de vivienda habitual) applies to the net rental income from long-term residential lets. This means only 40% of the net income is actually subject to tax. The reduction does not apply to holiday lets or commercial property.
• Holiday lets (alquiler turístico): Income from short-term tourist rentals is fully taxable without the 60% reduction. Owners must register with the regional tourism authorities and comply with specific regulations. Income from holiday lets is treated as economic activity income if the owner provides services beyond mere accommodation (cleaning, reception, etc.).

Non-Resident Property Tax

• Rental income: Non-residents who rent out property in Spain are taxed on the rental income. EU/EEA residents: 19% on the gross rental income (with certificate of residence). Non-EU residents: 24% on gross rental income. Expenses cannot be deducted at source for non-residents (they must file an annual return to claim deductions).
• Imputed income: Non-residents who own property in Spain and do not rent it out are taxed on imputed income (renta imputada). The taxable amount is 2% of the valor catastral (1.1% if the cadastral value has been revised). The tax rate is 19% for EU/EEA residents and 24% for others. This applies even if the property is empty or only used by the owner for holidays.
• Filing: Non-residents must file the Modelo 210 form quarterly for rental income and annually for imputed income. The deadline is generally within 1 month of the end of each quarter (for rentals) or between 1 January and 31 December of the following year (for imputed income).

Property Capital Gains

• Residents: Capital gains on the sale of property are included in the savings tax base of IRPF and taxed at progressive rates: 19% up to €6,000, 21% from €6,001 to €50,000, 23% from €50,001 to €200,000, 26% from €200,001 to €300,000, and 28% above €300,000. Since 2015, there is no indexation relief for the general regime.
• Non-residents: Non-residents selling property in Spain are subject to a 3% withholding on the sale price (retención), applied by the buyer and remitted to the AEAT. The final tax is 19% (for EU/EEA residents with certificate) or 24% (for non-EU residents) on the actual gain (sale price minus purchase price and documented improvements). The 3% withholding is a prepayment; the final tax is calculated and paid via Modelo 210.
• Exemptions: The following capital gains exemptions may apply: (a) principal residence reinvestment relief — if you are under 65 and reinvest the proceeds in a new principal residence within 2 years, the gain is deferred, (b) over 65 exemption — if you are over 65 and sell your principal residence, the gain is fully exempt, regardless of reinvestment.

FAQ

Can I deduct IBI from my rental income?

Yes, the IBI (annual property tax) is fully deductible as an expense against rental income for both residents and non-residents who file an annual non-resident tax return. It is one of the most straightforward deductions available to property owners.

What is the difference between valor catastral and market value?

The valor catastral is an administrative value assigned by the Catastro (Land Registry). It is typically 50–70% of market value for most properties. The valor catastral is used for IBI calculations and some other tax bases. The market value (valor de mercado) is the price a willing buyer would pay a willing seller. Tax authorities may challenge the declared sale price if it is significantly below market value.

Do I need an NIE to buy property in Spain?

Yes, any non-resident purchasing property in Spain needs a NIE (Número de Identidad de Extranjero) — a foreigner's identification number. You can obtain a NIE through the Spanish consulate in your home country or through a Spanish police station (after arrival). A tax representative in Spain is also recommended for ongoing tax compliance.

How is inherited property taxed?

Inherited property is subject to the Impuesto de Sucesiones y Donaciones (ISD) — inheritance and gift tax. The tax rate depends on the relationship to the deceased and the region of residence. After inheritance, the new owner becomes liable for IBI ongoing. If the property is sold later, the capital gain (if any) is calculated from the date of inheritance (the market value at the date of death becomes the acquisition cost).

Is there a annual wealth tax on property?

Yes, property is included in the Impuesto de Patrimonio (wealth tax) calculation. The general exemption of €700,000 per person plus the €300,000 main residence exemption may cover most property values. However, high-value properties (especially second homes) may result in a wealth tax liability. For full details, see our Wealth Tax Guide →.

Disclaimer

This guide provides general information about Spanish property taxes for the 2026 tax year. Tax rates, exemptions, and regional variations may change. The information does not constitute professional tax advice. All property owners and buyers should consult with a qualified Spanish tax advisor and a Spanish notary (notario) for advice tailored to their specific transaction.