Thinking about buying property in Spain in 2025? If so, you may already have seen headlines about a new 100% property tax on non-resident, non-EU buyers, which has been proposed by the country this year but not yet formalised into law.
Below, we explain what’s happening with Spain’s expat property taxes, who is set to be affected and how these changes might affect your purchase plans. We also look at how you send money abroad – a key consideration for expats.
Spain’s current property taxes for expats
Expats can already expect to come across several key taxes when buying (and selling) property in Spain:
Impuesto sobre Bienes Inmuebles (IBI): This is Spain’s annual property tax which everyone (Spanish residents or foreign non-residents) is expected to pay annually if you own a property in the country, spanning houses, flats, garages, land or commercial space. The tax is based on the property’s cadastral value – a value assigned by the Spanish government based on a number of factors such as the property’s size, location, construction value, condition and age.
Impuesto sobre la Renta de no Residentes (IRNR): The annual non-resident tax for those who earn any form of income or have assets, which in this case includes property. If you buy a property in Spain (or are thinking about it) and don’t spend more than 183 days in the country during the calendar year (i.e. you are a non-Spanish resident) you would be subject to this tax. EU/EEA residents are taxed at 19%, others at 24%.
Impuesto sobre Transmisiones Patrimoniales (ITP): If you are buying a pre-owned or second-hand property in Spain, you will need to pay ITP: the transfer tax applied for resale properties. This rate typically ranges from 6-10% of the purchase price, according to LexTax consulting.
Plusvalía Municipal: A local capital gains tax when you sell, which is imposed on the increase in the value of land the property is on during the period you owned it.
In other words, there are also some taxes in place that can add additional costs to a property’s value when buying in Spain. However, the newly proposed laws could change things.
Explaining the proposed property tax
In January of this year, the Spanish government announced it would propose a tax of up to 100% on property purchases by non-EU citizens who are non-residents.
The draft bill for this tax was submitted in May and confirmed within the proposal that non-EU, non-residents would see a 100% surcharge on the transfer tax specifically for second-hand home purchases. In other words, the 100% is referring to a doubling of the usual ITP tax, not the full property price.
Crucially, the measure hasn’t yet passed under law and could face some challenges. In June of this year, the European Commission issued a formal demand for Spain to cease its existing tax for non-resident EU property owners, calling the tax “discriminatory”, and this tax could face similar opposition.
There has not yet been a specific date set for implementing the tax and if it does pass, some have speculated that it could take some time before it actually comes to pass.
Who would be affected?
If the tax is implemented, it would target non-EU and non-resident buyers, with non-resident meaning the same as specified above – those who live in Spain for more than 183 days a year or hold EU citizenship are likely to be exempt from the new rules.
However, for expats outside the EU – for example, UK citizens who don’t hold residency in Spain – it could make buying property in the country more expensive.
Why it matters for money transfers from UK to Spain
When buying property in Spain, something not everyone considers is the potential losses that can occur when transferring money – particularly large amounts of money in the form of a deposit – overseas.
Whether you are looking to buy in the country soon or in the future, the additional expense from taxes makes it even more crucial to be aware of how you will send money to Spain and avoid unnecessary costs. Bear the following in mind:
- Exchange rates: These can fluctuate over time – particularly over an extended buying period involved with buying property.
- Transfer fees: Transferring money from the UK to Spain can come with significant costs fees attached and choosing the wrong provider can add additional costs.
- Transfer speeds: You’ll need to rely on your money moving quickly to secure your property deal abroad.
How to prepare as a UK expat buying in Spain
Spain’s property tax is a proposal and not yet confirmed into law. That being said, it continues to show an intention from the country to gain from high expat demands, which makes it more important than ever to stay informed and seek out professional advice if needed.
Crucially, you may need to budget for higher costs ahead and a key part of this is ensuring you aren’t wasting money unnecessarily on money transfers. FXcompared can help you compare international money transfer providers before you commit to sending money abroad, helping keep more money in your pocket even as Spain’s property laws evolve.
Compare money transfer providers with FXcompared today, or check out our full guide to buying property abroad here.
