What are the taxes and utility costs for real estate in Spain?

If you are considering buying property in sunny Spain, it is important to take into account the tax obligations and utility expenses that come with ownership. In this article, we will take a detailed look at various aspects related to property taxes and utility payments, provide examples of expense calculations, and discuss the specifics of renting property.

Property tax (IBI)

Every property owner, whether a resident or a non-resident, is required to pay property tax known as IBI (impuesto sobre bienes inmuebles). This tax must be paid by those who own property as of January 1 of the current year. The tax rate varies from0.4%to1.1%from the cadastral value, which is usually known and significantly lower than market prices. A convenient measure is the ability to link the payment of IBI to a bank account in a Spanish bank, which allows for automatic tax deductions. The bank will provide all the necessary documentation for payment, and a copy of the declaration will be sent to the local tax authorities.

Tax notification

It should be noted that property owners receive a notification about the tax amount one month before it is due. However, the absence of a notification does not exempt them from paying the tax, and there are penalties for delays, as well as interest on unpaid amounts. Tax rates can vary, and each municipality sets its own calculation parameters.

Current IBI rates in popular cities

To illustrate, let's provide the current IBI rates for 2021 in some popular cities in Spain for foreign buyers:

• Valencia: 0.950%
• Benidorm: 0.682%
• Torrevieja: 0.400%
• Althea: 0.503%
• Calpe: 0.867%

Income tax for non-residents (IRNR)

In addition, non-residents who spend less than 183 days a year in Spain and do not consider it their permanent residence are also required to pay income tax, known as IRNR (impuesto sobre la renta de no residentes). This obligation applies to all foreigners who own property, and it is their responsibility to independently calculate, fill out, and submit the IRNR tax return. The amount of tax also depends on the cadastral value, which can be found on the IBI payment receipt or on the cadastral registration website.

Filing a declaration in the absence of rental income

If your property is not rented out, the declaration must be submitted no later than December 31 of the year following the reporting period. The tax rate is24%from1.1%% of cadastral value or2%%, if the revaluation was conducted more than ten years ago. For example, if you have an apartment in Malaga with a cadastral value100 thousand eurosYour tax will be approximately250 euros.

Taxes on rental income

If you decide to rent out your property, you will need to file an income declaration every quarter. In this case, the IRNR tax will be calculated based on rental income.

Important aspects to consider before making a purchase

All of the above is important to consider before making a real estate transaction in Spain, in order to avoid unforeseen financial consequences and to clearly understand your obligations. Living in Spain offers not only the joy of relaxing on sunny beaches but also the need to take into account the financial responsibilities that come with purchasing property.

Tax rates for non-residents

The tax rate for residents of countries outside the European Union remains fixed at 24%. For example, if you earn rental income of €20,000 per year, the amount of tax due will be around €4,800.

At the same time, it is important to remember that you can deduct actual expenses, which is a crucial aspect for property owners. If you are not renting out your property continuously, you should file an income tax return for the months when the property was not rented out.

Declaration when selling real estate

In case you decide to sell your property, you need to submit a declaration within three months after the transaction is completed.

Wealth tax in Spain

In addition, there is a tax in Spain known as the wealth tax. It is paid by both residents and non-residents if the market value of their property exceeds €700,000 and does not include encumbrances.

The rates of this tax vary depending on the value of the property and range from 0.2% to 2.5%. Reports must be submitted at the end of the calendar year, when the tax is also paid.

Since 2021, the Spanish government has increased the maximum wealth tax rate by 1% in regions where local rates are not set. This could result in asset owners with holdings worth over €10 million in certain areas facing a tax rate of 3.5%.

Real estate experts recommend to homeowners:

• Distributing property among relatives
• Consulting tax advisors to reduce your tax liabilities.

Utilities for apartment owners

Regarding utilities, apartment owners in residential complexes with shared amenities such as pools, gardens, and secured parking are required to pay maintenance fees. The amount of these fees depends on the level of services provided, and the sums can range from €50 to €500 per month for more prestigious complexes.

For individual houses, the cost of services is determined by the level of infrastructure — this may include:

• Garbage disposal
• Security
• Cleaning of the adjacent area
• Road lighting

Expenses can range from €500 to €1500 per year. In more expensive complexes with various additional amenities such as tennis courts, saunas, gyms, and restaurants, annual fees can significantly exceed the usual amounts.

The salary of a gardener and cleaning services

The salary of a gardener for maintaining a private home ranges from €80 to €200 per month and depends on the size of the property. If you have a pool, regular cleaning once a week will cost you between €50 and €200 per month, while house cleaning can cost between €7 and €10 per hour.

The cost of electricity in Spain

As for the cost of electricity, it depends on many factors, including the chosen supplier, tariff plan, and consumption volume. It is important to understand that, regardless of actual electricity consumption, every property owner is obligated to pay for the connected capacity according to the contract (subscription fee).

Therefore, owners of summer houses, who only visit them for a few weeks a year, often set minimum consumption limits, for example, at the level of 5 kWh, which helps reduce their financial expenses.

In addition to the established rates based on meters, property owners are also required to pay for actual electricity consumption. On average, a family of three living in resort apartments spends between 50 to 120 euros per month on electricity. Villa owners typically need to allocate significantly more funds for utilities.

Water supply expenses

Regarding water supply, in resort areas like Torrevieja, the cost of water per cubic meter ranges from 0.5 to 1.5 euros, depending on the region and the specific supplier. Typically, families of two to three people consume about 15 cubic meters of water per month. Many municipalities charge a fixed fee for minimum usage (canon de consumo), regardless of actual consumption. In some areas, especially where private companies operate, rates for vacation property owners can be significantly inflated.

Thus, the monthly water supply expenses average around 20 euros if the apartment is not in use, and can reach up to 40 euros when a family of three is living there. If you're interested in personal experiences, you can check out the stories of people who bought property in Spain a few years ago.

Gas supply

When it comes to gas supply, centralized heating is available in the central and northern parts of the country. In the south and on the eastern coast, this service has only started to develop relatively recently. Depending on the size of the family and the frequency of gas usage, the average costs for centralized gas supply are about 30 euros per month per person. If a gas cylinder is needed, its cost ranges from 17 to 30 euros, which is usually sufficient for active use over the course of a month.

Modern apartments

Modern apartments are no longer equipped with central heating according to new building regulations. Instead, they are fitted with air conditioners with split systems and systems that help save energy resources while providing a comfortable temperature level.

Real estate insurance

Regarding insurance, if buyers take out a mortgage, they are required to insure their property. For those purchasing a home without a loan, insurance becomes optional. The cost of the insurance policy is determined based on the market value of the property, the amount of coverage, and other key factors. The minimum price for such insurance is80 eurosper year, while comprehensive insurance with protection against potential damage can cost from400 to 500 eurosfor the same period.

Cost calculation

It would be helpful to use a special calculator that will assist you in calculating the total expenses for purchasing and maintaining an apartment by the sea in Alicante, as well as estimating the costs of housing in new developments with well-developed infrastructure. You can always find up-to-date information on investments, immigration, and the foreignreal estate market in specialized sources.

Summary of expenses

To practically understand the issues related to expenses for an apartment with an area of 100 square meters, it makes sense to look at real figures and evaluate the cost of maintaining residential property in Spain in more detail. Such data will help create a more complete picture of the necessary budget for comfortable living.

Real estate in Alicante

In the resort area of Alicante, various properties are available, with prices approaching185 thousand eurosThe total annual costs for such facilities include:

• property tax — 925 euros,
• utility fees — 780 euros,
• Apartment insurance - 150 euros,
• The condominium maintenance fee is 1438 euros.

Thus, the total costs for maintaining the property for the year amount to3293 euros.

Payment of utility bills

If you do not plan to live permanently in Spain and want to know how to pay for utilities, it is important to be aware of the options available.automatic deduction of fundsfrom your bank account. This will allow your bank to pay the bills issued by management companies without your intervention. Don't forget to check your account balance to avoid situations where there are insufficient funds for timely payment.

Risks of non-payment

Special caution should be exercised, as late tax payments can lead to the accumulation of debts and fines. If debts are left unpaid, it can result in serious consequences, such as:

• problems with renewing your visa
• difficulties in obtaining a residence permit in Spain.

Long-term lease

As for the rental market, especiallylong-termAccording to information published by the well-known resource Idealista, in 2020, the profit from rental investments increased to7.5% per yearHowever, after paying taxes and fees to the management companies, the net income can amount to4% to 5%.

Reduction of rental rates

Nevertheless, at the beginning of 2021, the first event in a decade occurred.decline in rental ratesthroughout Spain, caused by the drop in rental prices. In major cities, rental costs have decreased by more than10%This is due to the fact that many apartments that were previously available for short-term rental have become available for long-term rental as the number of tourists has significantly decreased due to the COVID-19 pandemic.

Minimum rental rates

For example, let's look at the minimum possible rental prices at popular resorts in Costa Blanca according to Idealista:

• In Alicante, renting a one-bedroom apartment will cost300 eurostwo-room350 euros.
• In Torrevieja, rental prices are a bit higher: one-bedroom apartments start from350 euros, and two-room apartments start from400 euros.
• In Calpe, the price range varies from500 eurosfor a one-bedroom apartment up to600 eurosfor two.
• In Benidorm, the prices vary from400 to 550 eurosaccordingly.
• In Altea, you can rent a one-bedroom apartment for500 eurosper month, and a two-room apartment — for650 euros.

Short-term rental

In the fieldshort-term rentalwhich is very popular at resorts and coastal areas, prices can vary significantly depending on location, season, and type of property. For example, for a one-bedroom apartment designed for two people, the average weekly rates look like this:

• in the high tourist season — around350 euros,
• on average — from280 euros,
• in the low season — minimum210 euros.

Real estate registration

It's important to mention that regardless of the type of lease, allReal estate must be registered.in the Ministry of Tourism. Apartment owners are required to submit a tax declaration for income earned from rental activities. In recent years, government authorities have intensified control in this sector, as there is a trend among some owners to minimize the payment of rental tax, which amounts to24%from the received funds. This attracted the attention of the authorities and could lead to additional inspections and sanctions for violators of tax legislation.

Introduction

The interaction between landlords and tenants is based on a bilateral agreement that outlines the rights and responsibilities of both parties.

Rental rates are formed solely based on the agreement between the parties and are not subject to strict legislative regulation. Typically, the minimum term for long-term rental, which implies monthly payment, is one year; however, the tenant can extend this rental agreement annually.

During the first five years, any possible increase in rent occurs only in accordance with the inflation rate. Typically, rent is paid monthly, with the tenant paying in advance for the current month.

Utilities and repairs

The rental agreement also outlines the procedure regarding the payment of utilities and the responsibility for them. Most often, these obligations are placed on the landlord, who pays the supplying organization, and then the tenant reimburses these expenses to the landlord alongside the rent payment.

According to the law, major and cosmetic repairs of housing must be financed by the owner, while current and minor repair work is carried out at the tenant's expense. If the tenant plans to make any changes to the premises, they must obtain consent from the landlord.

Rental of furnished apartments

When renting out an apartment that is already furnished, it is advisable to add a list of existing appliances and valuables to the contract, as well as to provide a detailed description of all existing defects and damages — this will help avoid potential disputes.

If you are renting out an apartment, whether for a short or long term, it is important to notify local authorities about your tenants. If property management is entrusted to an agency or management company, this responsibility falls on the specialists.

Services of management companies

In case the owner is unable to be in Spain permanently, it is recommended to seek the help of a management company. These professionals will take on the responsibility for:

• payment of taxes and utility bills;
• representation of the owner's interests at meetings with residents;
• monitoring the technical condition and state of the apartment, with prompt response to any malfunctions that arise.

Prices for management company services

As a rule, the services of management companies in Spain can be more affordable compared to similar services in other European countries. Typically, the payment is not based on square meters, but rather for each apartment, and it amounts to about 1 euro per day, which totals 365 euros for the year.

However, some companies calculate their rates based on the area of the property, and this can range from 6 to 15 euros per square meter per year, averaging around 8.4 euros.

Short-term rental

The situation with short-term rentals is different. Property management companies usually charge at least 5% of the total rent for tenant search services. It's also worth noting that living in Spain offers the opportunity to save significantly compared to the northern regions of Europe.

This country offers comfortable living conditions and rental options, making it attractive for both long-term and short-term stays. Considering all these factors, renting property in Spain can be a successful option for both owners and tenants.

Against the backdrop of the rapidly increasing number of British retirees choosing to live in the picturesque Pyrenees, the question of the cost of living in these regions is becoming increasingly relevant. According to the Spanish Ministry of Labor and Social Protection, the minimum wage set in 2021 was €1108 per month, making life here more comfortable for many newcomers. We recommend checking out our articles on living costs in Spain.

Changes in the real estate market

The real estate market in Spain has also undergone changes.

We present to you a house.

We present to you a wonderful house with a plot of land, a well-maintained garden, and a garage, located in a residential complex with a shared pool. Its convenient location near the Villamartin golf club makes this property particularly attractive.

The house consists of two levels:

• On the first floor, there is a large living room with a fireplace, one bedroom, a bathroom, and a kitchen complemented by a storage pantry.
• On the second level, there are two bedrooms, another bathroom, and two balconies that offer a magnificent view of the surroundings.

Apartments in Torrevieja

The next property is an apartment located in Torrevieja, Spain. The total area of these apartments is 60 square meters and includes three rooms: two bedrooms and one bathroom.

There is also:

• kitchen,
• cozy living room,
• the inner courtyard and the hallway,
• sunny terrace.

The property is located on the second floor and just two hundred meters from the beautiful promenade and Playa del Cura beach.The apartments are sold fully furnished.with household appliances and air conditioning. All necessary commercial infrastructure is in close proximity.

Spacious apartments in Torrevieja

In addition, we are pleased to present spacious apartments in Torrevieja, covering 90 square meters and located just 300 meters from the beach and promenade.

These apartments include:

• two bedrooms,
• one bathroom,
• modern kitchen,
• the living room and the hallway,
• a large terrace overlooking a cozy inner courtyard.

All furniture, appliances, and the air conditioning system are included in the price.that adds convenience for future owners.

Other housing options

We also offer another interesting property — a 55 square meter apartment in the newest area of Torrevieja, located two kilometers from the city center and the beach.

These apartments are located on the first floor and include the following:

• two bedrooms,
• one bathroom
• kitchen and living room,
• a terrace with an area of 6 square meters.

The feature of this object isspacious corner yard with an area of 106 square meterswhich includes facilities for parking, relaxation, and even a small garden. The apartments are also offered with furniture and appliances, and have access to a shared pool area.

Apartment of 63 square meters

If you're looking for something different, we have a 63 square meter apartment in Torrevieja that includes three rooms:

• two bedrooms and
• one bathroom.

This property is located on the third floor and includes a terrace with an area of 8 square meters.Remote viewing is available.that makes it possible to complete the transaction online.

Luxurious accommodation options

For those looking to explore more luxurious options, it's worth considering the penthouse in Estepona. This property has an area of 110 square meters and includes three bedrooms with three modern bathrooms.

This new penthouse belongs to an exclusive complex.which consists of only 15 apartments and is located in a picturesque spot on the coast. The project is created by a company with 50 years of experience in the market, which aims to provide its clients with a high level of comfort and quality of life.

Unique villa in Estepona

It is also worth mentioning a unique villa in Estepona with an area of 150 square meters, featuring four bedrooms and four modern bathrooms. This amazing property offers stunning sea views and is located in the Buena Noches residential complex.

Combining elegance and comfortThe villa stands out among other real estate offerings, providing exceptional living conditions.

Unique opportunities from Marbella Dream Homes

Marbella Dream Homes is opening exciting opportunities for those who dream of successfully purchasing real estate in Spain. Let's take a closer look at some impressive offers available on the market.

Apartments in Estepona

The first option is new apartments in Estepona, with an area of 92 square meters, priced at590,000 eurosThis project belongs to the premium category and is designed to create the most comfortable living conditions right by the coast. The client, with half a century of experience in the construction industry, provides high-quality living spaces, focusing on a quality and balanced lifestyle. This complex features only 15 apartments, ensuring privacy and comfortable living.

Similar apartments in Estepona

In this same area, other apartments of a similar format are also available, priced at540,000 eurosFor 92 square meters. This project is also renowned for its excellent living conditions and opportunities for active leisure. The client, with luxurious experience, creates an atmosphere where one can enjoy a fulfilling life. Since the number of apartments in this complex is limited, its residents can expect unique conditions for relaxation and living.

Townhouse in Marbella

In Marbella, you can purchase a townhouse, the cost of which is335,000 eurosThe area of the house is 94 square meters. Inside, there are two bedrooms and two bathrooms, and the house itself was built in 1976 in the traditional Andalusian style. The surroundings of this picturesque place reflect the spirit of Andalusia with its colorful houses and green olive trees, making it ideal for those who appreciate comfort and the beauty of natural landscapes.

Charming apartments in Marbella

Impressive apartments in Marbella can be purchased for just489,000 eurosThese ground floor apartments have an area of 135 square meters and are oriented to the east, offering a partial view of the picturesque mountain and sea landscapes. The property is located in a gated residential complex with scenic natural landscapes, a swimming pool, and well-maintained gardens, making it an ideal option for both permanent living and regular vacations.

Duplex penthouse in Estepona

Duplex penthouse in Estepona, priced at599,000 eurosThis is a completely new and beautifully designed house right by the sea. The total area is 154 square meters, featuring three spacious bedrooms with stunning views of the sea and mountain ranges. It is the perfect space for family living, meeting the needs of even the most discerning clients.

Apartment in Benidorm

In addition, an apartment is for sale in Benidorm priced at215,000 eurosThis apartment, covering an area of 80 square meters, features three bedrooms and two bathrooms. This bright and sunny apartment includes a kitchen, dining area, and a terrace with a mesmerizing view of the surrounding landscapes. The price of the apartment also includes a parking space in the underground complex. The internal amenities offer a large communal pool and a children's play area, making this residence ideal for families with children.

Conclusion

Thus, Marbella Dream Homes offers perfect options for true seekers of life in sunny Spain, with a focus on comfort and luxury. If you dream of property on picturesque coastlines or in captivating corners of the country, the various options from this company can meet all your expectations and desires.

Purchase of a Villa in Torrevieja

A villa located in Torrevieja, priced at €269,500, is an excellent option for those looking to own property in Spain. The total area of this home is 72 square meters and spans two floors.

Inside, you can find two bedrooms, two bathrooms, a modern and spacious kitchen, as well as a cozy living-dining area. The outdoor terrace will be a wonderful place to relax on sunny days, allowing you to enjoy picturesque views all year round.

The villa is offered for sale fully furnished, and all necessary equipment is already included: nightstands, mirrors, and built-in wardrobes.

Duplex in Dehesa de Campoamor

There is also a duplex for sale in the prestigious area of Dehesa de Campoamor, priced at €210,000. This area, located at the southernmost part of the Costa Blanca, is surrounded by green pines and is famous for its luxurious villas.

The area of this apartment is 98 m² and includes:

• four bedrooms,
• three bathtubs,
• a beautifully designed interior, including a cozy kitchen.

Dehesa de Campoamor is famous for its magnificent beaches, such as Playa de la Glea and Playa Aguamarina, as well as a variety of restaurants and cafes, making it an attractive destination for a vacation.

House in the Punta Prima area

Additionally, for €430,000, there is an opportunity to purchase a house in the Punta Prima area, which is just a few minutes from Torrevieja. This convenient residential area is located only five minutes from the stunning beaches of Orihuela Costa and about 45 kilometers from Alicante Airport.

In the vicinity, there are:

• golf courses Villamartín and Las Ramblas,
• The large shopping center La Zenia Boulevard, which offers a wide range of services and amenities.

Important aspects of buying real estate in Spain

There are several important points to consider when purchasing real estate in Spain:

• Right to sellOnly the owner or their authorized representative has this. Usually, all transactions are monitored by licensed agencies.
• It should be noted that secondary real estate may have debts inherited from previous owners, and this fact should be taken into account before reselling.

Taxes on real estate sales

The obligation to pay capital gains tax falls on the seller of real estate in Spain.

• For non-residents from EU countries, the tax rate is 19%, while for citizens of third countries, it is 24%.
• Residents of Spain are taxed on their income at rates ranging from 19% to 23%, depending on the amount of income.
• In some cases, owners may avoid paying this tax if they lived in their home for three years prior to the sale.

Preliminary payment and tax refund

In transactions with non-residents, a preliminary payment of 3% of the property value is usually required as an advance payment for income tax. The remaining amount must be paid to the seller within three months.

If you are unable to make a profit from the sale, it is possible to file a request for a refund of the advance tax.

The active real estate market in Spain

As of today, the real estate market in Spain is actively functioning, offering a variety of options for both purchase and rental. This makes the process of obtaining one's own housing here quite accessible and appealing to many buyers. The extensive catalog of available properties allows potential owners to find the perfect option that meets all their requirements and expectations.

Conclusion

Ultimately, planning the financial aspects related to real estate in Spain requires careful attention and thorough analysis. Taxes, utilities, and other mandatory payments are an integral part of a property owner's life. I hope the information provided has helped you better understand the obligations that come with property ownership, whether it's a house or an apartment.

It's important to remember that each municipality has its own specific tax rates, so understanding local norms and regulations can significantly help with savings. Property taxes and rental income can vary, and careful planning will help you avoid unexpected expenses. I strongly recommend consulting tax advisors, especially if you have large investments or a complex tax situation.

Utility payments can also become a significant expense, especially if you live in an apartment building with developed infrastructure. The better the utilities are organized, the more comfortable your living will be, but this will also reflect in your monthly costs.

Spending time in such a beautiful place as Spain can turn into a real pleasure if you are prepared for its actual economic aspects.

Key points to remember:

• Know the local tax rates.
• Plan your financial commitments in advance.
• Consult tax advisors.
• Evaluate the utility services and the associated costs.

So, if you are considering buying or renting property in Spain, take note of all the recommendations and information provided. Remember that good preparation is half the success in any financial matters. I hope my article serves as a helpful starting point for your successful engagement with the Spanish reality.