Purchase costs
The total cost of a Spanish property will depend on its location. This is because each autonomous Spanish region sets its own rate of transfer tax (Impuesto de Transmisiones Patrimoniales or ITP), which is payable on a resale purchase. The ITP payable in Valencia (home to the Costa Blanca) is 10%, Murcia 8%, and 7% in Andalusia at the time of writing. In the Canaries it is the lowest, at 6.5%.
On top of the ITP are other costs – 0.5 -1% notary fees and land registration, up to 0.7% for other costs such as NIE; independent legal fees that are often quoted as 1% but might typically be €1,000 to €2,000, depending on the complexity of the conveyancing process. Allow 10-14%, depending on which region, and whether you are taking out a mortgage.
Ongoing ownership taxes/fees
Council tax
Spain’s equivalent of council tax is Impuesto sobre Bienes Inmeubles (IBI), also known as SUMA. IBI rates vary slightly by municipality and are applied to a property’s rateable (or book) value, which is usually significantly less than its market value. IBI often – but not always – includes the tax for local rubbish collection. An annual budget of €600-€800 for IBI should be adequate, less for an apartment, dependent on location.
Communal fees
If the property is part of an urbanisation or complex, community fees to cover the upkeep of communal areas and facilities will need to be paid. These are often as little as €45-65 a month on older developments with one swimming pool, but newer projects will be nearer €100 a month, some €150. With amenities you tend to get what you pay for.
Imputed income tax declaration
Even if the property is not rented out, an annual ‘imputed income tax declaration’ will have to be made and a small amount of tax, likely to be €200-€400, paid.
Cost of living
According to global consumer price website numbeo.com, Spain is 21% less expensive than the UK in terms of consumer prices in 2023. If you don’t live in a city such as Madrid or Barcelona, you will probably pay less for things such as annual taxes, transport and also rental rates.
You can still buy a menu del dia (menu of the day) for €10-15; a cup of coffee can be less than €1, but the average is around €1.50. The average monthly net salary (after tax) in Spain is €1,782 (£1,532). The comparative for the UK is £2,304.46.
Rental income tax
Any rental income derived from a property must be declared and taxed in Spain, with tax levied at 19% for non-resident EU citizens and allowances for certain expenses. The double taxation treaty between Spain and the UK means you shouldn’t pay tax on any income from rentals twice.
