After the keys: running costs and taxes for property owners in Spain

Once the contract is signed and the keys are handed over, it is easy to think the big financial decisions are behind you. But as a property owner in Spain you have a number of fixed annual costs to keep track of. Some are paid automatically, while others require you, or an adviser, to file a tax return. Knowing them in advance means you budget correctly from day one, instead of being caught out along the way.

The best-known item is IBI, the municipal property tax that every owner pays each year, whether the home is used, let out or empty. The amount is based on the property's cadastral value and the municipality's tax rate, so it varies quite a bit from place to place on the Costa del Sol. For an average apartment, in our experience it is typically somewhere between a few hundred and around a thousand euros a year. IBI is normally collected by direct debit from a Spanish bank account, and we recommend all clients set this up early.

On top of IBI comes a tax many overseas owners are unaware of until their first return: imputed income tax on homes that are not let out. The Spanish tax authorities assume that a home you own has a value to you even when you only use it yourself, and tax a small share of its cadastral value each year: normally 2 per cent, or 1.1 per cent where the municipality's cadastral values have been revised in the last ten years. If you are tax resident in the EU or EEA, the rate is 19 per cent of that amount. For everyone else, including UK residents since Brexit, it is 24 per cent. The tax is declared on Form 210, the annual return for non-residents. From the 2026 tax year, it is filed between 1 April and 31 December of the following year, and most of our clients let a local adviser or lawyer handle it. A royal decree-law from October 2026 changes how the base is calculated from 2027, but it still has to be confirmed by the Spanish parliament, so ask your adviser which rules apply. Your home country may also tax or report Spanish property in its own way, so check with an adviser there too.

Wealth tax worries more people than it actually affects. Andalucía has in practice abolished regional wealth tax through a 100 per cent relief. Non-residents pay wealth tax only on their Spanish assets, and may apply the rules of the region where most of those assets are, so an owner whose Spanish property is on the Costa del Sol benefits from the Andalusian relief. There is still a state solidarity tax on large fortunes, which only applies to net wealth well above 3 million euros. If you have significant assets, check this with an adviser who knows both your situation and the rules for the current year.

On top of the taxes come the practical running costs: community fees (comunidad de propietarios), which cover maintenance of shared areas, gardens, pools and any security, as well as rubbish collection, buildings and contents insurance, and the standing charges for electricity and water even in periods when the home is empty. Community fees vary a great deal with standard and facilities, from a modest monthly sum for a simple apartment to considerably more in exclusive, staffed developments with round-the-clock security and extensive shared facilities. Adding it all up for a typical two-bedroom apartment on the Costa del Sol, most owners in our experience end up somewhere between a few thousand and close to ten thousand euros a year, depending on standard and location.

None of these items is a reason to worry when you know about them in advance and build them into your budget from the start. We help all our clients put together a realistic picture of the costs for the exact property they are considering, and can put you in touch with advisers who take care of the annual obligations after completion. If you are still deciding what to buy, our article on new build or resale explains how the purchase taxes differ. Get in touch with us for a no-obligation review of what applies to your property.