When buying property in Spain as a foreigner, it's crucial to understand the different types of taxes you may be liable for. These can include property taxes, income taxes, and wealth taxes, among others. This guide provides an easy-to-follow overview of these taxes, helping you navigate your obligations as a foreign property owner in Spain.

Property Purchase Taxes

Transfer Tax (Impuesto de Transmisiones Patrimoniales, or ITP)

When buying a resale (second-hand) property, you're required to pay Transfer Tax. The rate varies between regions but is generally between 8% and 10% in Andalusia, where Marbella is located.

Value Added Tax (IVA) and Stamp Duty (Actos Jurídicos Documentados, or AJD)

If you're buying a new build property directly from a developer, you'll pay IVA (10%) and AJD (1.5%) instead of Transfer Tax.

Ongoing Property Taxes

Annual Property Tax (Impuesto sobre Bienes Inmuebles, or IBI)

This municipal tax is based on the cadastral value of your property and varies depending on the municipality. In Marbella, it ranges between 0.4% and 1.1%.

Non-Resident Imputed Income Tax (Impuesto sobre la Renta de No Residentes, or IRNR)

Non-residents who own a property in Spain must pay IRNR, even if the property isn't rented out. The tax is calculated as a percentage (usually 1.1% or 2%) of the cadastral value of the property.

Income Tax

Rental Income Tax

If you rent out your property, you must declare the income and pay tax on it. EU, EEA and Swiss residents pay 19%, while non-EU/EEA residents pay 24%.

Capital Gains Tax

When selling your property, you may have to pay Capital Gains Tax if the property has increased in value. The rate is 19% for EU, EEA and Swiss residents and 24% for non-EU/EEA residents.

Wealth Tax

Spain has a wealth tax, which applies to assets over a certain value, including real estate. The tax-free allowance for non-residents is €700,000. The rate varies between 0.2% and 2.5%.

Inheritance and Gift Tax

If you inherit or receive a Spanish property as a gift, you may have to pay Inheritance and Gift Tax. The rate varies significantly based on several factors, including the value of the property, the beneficiary's relationship to the giver, and the beneficiary's existing wealth.

Conclusion

Understanding your tax obligations as a foreign property owner in Spain is crucial. It's recommended to seek advice from a tax professional familiar with Spanish property law to ensure you fully understand these obligations and are able to budget accordingly.

Keep in mind that this guide is meant as a general overview and the specific details of your situation can significantly impact your tax liabilities. Therefore, it's always a good idea to seek personalized advice.

Additionally, tax laws can change, so it's important to keep up-to-date or work with a professional who can advise you on any changes that may impact you.

Buying a property in Spain can be a rewarding investment and provide a fantastic lifestyle. By understanding the associated taxes and planning for them, you can ensure a smoother, more predictable experience.