Spain

In Spain, real estate taxes are regulated by both the national government and local municipalities. The key types of taxes related to real estate in Spain include:

Property Ownership Tax

Property Tax (Impuesto sobre Bienes Inmuebles - IBI): In Spain, property tax is paid annually by property owners and applies to both residential and commercial properties. It is based on the cadastral value (valor catastral), which is lower than the market value.

• The tax rate varies depending on the municipality but generally ranges from 0.4% to 1.1% of the property’s cadastral value per year.
• The property tax is typically the responsibility of the property owner.
• The tax rate can vary significantly between regions, with certain areas applying higher rates for high-value properties.

Real Estate Transfer Tax

The real estate transfer tax is applied when a property changes ownership, such as during a sale or inheritance.

• The standard tax rate is 6% to 10% of the property’s purchase price or market value, depending on the autonomous community.
• The transfer tax rate may vary in different regions of Spain. For example, in Madrid, it is typically 6%, while in Catalonia, it ranges from 7% to 10%.
• Some exemptions or reductions may apply, such as for first-time homebuyers or for properties in certain regions.

Capital Gains Tax on Real Estate

Capital gains tax applies when a property is sold at a profit, though exemptions may apply for primary residences under certain conditions.

• The general capital gains tax rate is 19% on the first €6,000 of the profit, 21% on the next €44,000, and 23% on profits over €50,000.
• If the property was owned for more than 3 years, the capital gains tax rate can be reduced based on the number of years the property was owned.
• If the property was used as a primary residence for at least 2 years, it may be exempt from capital gains tax, depending on the specific conditions of the sale.

Inheritance and Gift Tax

Spain imposes inheritance and gift taxes on the transfer of property, with rates depending on the relationship between the deceased or donor and the recipient.

• Inheritance and gift taxes are progressive, with rates ranging from 7.65% to 34% depending on the value of the inheritance or gift and the relationship.
• Spouses and direct descendants (children) benefit from significant exemptions, which can be as high as €15,000 to €50,000, depending on the region.
• The rates for inheritance and gift taxes can vary significantly by region (autonomous community) in Spain, with some regions offering more favorable rates.

Municipal Tax

In addition to property tax, some municipalities may impose additional local levies or charges for certain types of real estate, such as for the use of public infrastructure or services.

Income Tax on Rental Income

If rental income is generated from real estate, it is subject to both national and municipal income taxes. The tax rate depends on the total income and the tax bracket of the property owner.

• Rental income is taxed as part of the overall personal income tax, with rates ranging from 19% to 47% depending on the income level.
• Property owners can generally deduct related expenses, such as maintenance costs, property management fees, and mortgage interest, from their rental income.
• If the property is rented out for long-term stays, it may be subject to lower tax rates compared to short-term rentals (such as those listed on Airbnb).