Owning property in Spain taxes

• Understanding home ownership costs in Spain

• Utility bills

• Property taxes

• Insurance

• Mortgage fees and expenses

• Other hidden ongoing costs

• Unplanned expenses

• Property management services

• Conclusion: important points to remember

1. Understanding home ownership costs in Spain

Property maintenance in Spain is an important aspect that must be considered before closing a deal.

Expenses are divided into two categories:

Fixed payments:

• Taxes
• Insurance
• Home maintenance
• Local services (cleaning, garbage collection)

Variable payments:

• Resource consumption (water, electricity, gas)
• Communications (internet, phone, television)

The amount of expenses depends on the region, type of housing and its location.

Average annual maintenance costs (basic, EUR)

2. Utility bills

Comunidad (community fee)

Residents of apartment buildings or residential complexes pay for housing services: cooperative (Comunidad) represented by a selected management company.

Services typically include:

• Cleaning of entrances and territory
• Lighting
• Elevator repairs
• Lawn care
• Security
• Garbage collection

Cost: €200–€1,500 per year.

In complexes with developed infrastructure (tennis courts, spa, gym, restaurant, pools, jacuzzi) fees are significantly higher.

Private home owners can hire management companies or pay for individual services (gardener, cleaner, pool cleaning). Garbage collection alone costs approximately €120 per year.

Water

• Subscription fee for water supply connection: ~€60/year
• Progressive pricing depending on consumption
• Example (Valencia): first 15 cubic meters (2 months) = €0.44; next 15 = €0.66; next 20 = €1.78
• Two-three people usually consume 15 cubic meters

Electricity

• Subscription fee for electrical grid connection: ~€60/year
• Average cost: €0.24 per kWh (more expensive than in many European countries)
• Modern homes are usually energy efficient

Gas

• Average price: €0.09 per kWh
• Used primarily for heating and water heating
• Water heating alone costs minimum €200/year

Heating

• Gas heating for a two-bedroom apartment: €200 in winter month
• Air conditioning heating costs more
• Northern Spain: heating season from November to March
• Canary Islands: just a couple of months (no central heating)

Phone, internet, TV

Spanish providers usually offer combined contracts for phone, internet and television.

Package example: phone with unlimited calls to Spanish mobile numbers, internet up to 120 Mbps, extended TV package = ~€500/year

Garbage collection tax

Garbage collection tax is paid by both residents and non-residents.

• Charged annually by municipality
• On average: €100–€200

Cleaning and domestic help

• Cost: €7–€10 per hour
• Average villa requires 6–8 hours of cleaning
• Cost of one cleaning: €42–€80
• Monthly weekly cleaning: from €150

Pool and garden maintenance

• Average cost: €130–€250 per month
• Depends on plot area and landscape design
• Large well-maintained gardens with abundance of flowers: over €300/month

3. Property taxes

Municipal property tax (Impuesto Sobre Bienes Inmuebles)

• Rate: 0.4%–1.1% of cadastral value
• Cadastral value is usually several times lower than market value
• Average range: from €100 to over €2,000 per year (depending on type — apartment or house)

Income tax on property (Impuesto Sobre la Renta de las Personas Fisicas)

• EU residents (including Iceland and Norway): 19% (in 2015 — 19.5%)
• Non-EU residents: 24%
• Calculated on 2% of cadastral value (or 1.1% if cadastral value was revised since January 1, 1994)
• Tax rates in recalculation: 0.48% or 0.265% of inventory value
• When renting out: 24% of all rental income received (for non-EU residents)
• Important: this tax is charged regardless of whether you rent out the property if it is your second home

Calculation example: if you are a non-resident and the cadastral value of your apartment is €72,000, the tax will be €190 (72,000 × 1.1% × 24% = €190).

Wealth tax (Impuesto sobre Patrimonio)

• Applies to assets in Spain worth €700,000 and more
• Rate scale: 0.2%–3.03% of net asset value
• Rate depends on region
• Experts believe this tax will be abolished in the coming years

4. Insurance

Insurance is not legally mandatory, except when you have a mortgage (then it is mandatory).

Protection covers:

• Fire damage
• Natural disasters
• Accidents

Approximate cost of basic package: €300–€350/year

Cost depends on property value.

Calculation of basic Seguro de Hogar insurance

Property parameters (Alicante):

• Not first and not last floor
• Year of construction: not older than 1980
• Area: 80 m²
• Furnishing value: €20,000

Result: €125–€135 per year for basic package with full coverage (100%)

Insurance contract conditions

Any insurance contract in Spain is concluded for one year and automatically renewed for the next 12-month period. Termination notice must be submitted 1–1.5 months before renewal.

Popular types of property insurance

Recommended insurance companies: Grupo Catalana, Mapfre, Generali, Zurich

5. Mortgage fees and expenses

When arranging a mortgage, the purchased property is pledged to the bank and serves as a guarantee for loan repayment.

Typical interest rate: 3%–3.4%

Mandatory mortgage expenses:

• Credit opening commission: 1.5% of loan amount
• Bank property appraisal: ~€300
• Mandatory insurance: ~€200–€300 per year
• In the first year, the bank typically requires health insurance for the loan recipient

Variable and fixed rates

Variable rate risks: rate is recalculated every 6–12 months based on official market indicators (Euribor in Spain).

Variable rate is a risky option. In different periods, the percentage can both decrease and increase.

Total mortgage expenses

• Secondary market: additional expenses 1–2% (total 13–14% of cost)
• New construction: total 14–15% of cost (increase by 1–2% due to stamp duty)

6. Other hidden ongoing costs

Comunidad fees for complexes

• Apartments with common areas: €300–€800/year
• Individual villas (depending on urbanization): €500–€1,500/year
• Elite complexes with infrastructure: several times higher

Maintenance services

• Weekly gardener work: €80–€200/month (depending on plot area)
• Pool cleaning (weekly): €50–€120/month
• House cleaning: €7–€10/hour

Parking

• Parking space rental (if not purchased): from €100/month

7. Unplanned expenses

Property requiring renovation often costs less and provides an opportunity to arrange housing to your taste.

Requirements for contractors

In Spain there is a concept of “estimate of work” which contracting companies must adhere to. The agreed cost cannot exceed the estimate.

Renovation cost

• Average range: €1,250–€2,500 per m² (including all approvals)

Designer services

• Status designers: often Italian specialists
• Design project for 50–70 m² apartment: ~€10,000–€15,000

Typical unplanned repair work

• Flooding
• Plumbing repairs
• Wall painting
• Boiler maintenance
• Pipe replacement

8. Property management services

If the owner cannot permanently reside in Spain, it is worth using property management company services.

Services provided

• Payment of electricity and water bills
• Collection of payments from owner
• Security
• Cleaning of common areas

Cost structure

Per-item assessment: ~€1/day (€365/year)

Assessment by area: €6–€15/year per m² (average €8.4)

• Cost decreases with larger area
• Additional cleaning is paid separately

Property management services in Spain are cheaper than in the rest of Europe.

9. Conclusion: important points to remember

Annual apartment maintenance costs

Annual villa maintenance costs (detached)

Ways to reduce costs

Property maintenance costs in Spain can be significant, however they can be reduced through economical resource consumption, as well as living only in high season without using communication services.

Reasons for possible delays in processing

• Bank decision delay on mortgage issuance
• Valid reasons why buyer cannot make payment
• Buyer discovered problems with property condition requiring repairs, or demands refund
• Notary is not satisfied with the provided document package

Buying at construction stage (off-plan)

When buying property at construction stage, delays in completion deadlines are possible. For this reason, the purchase and sale agreement may be signed later than planned. Installment payments are kept in escrow account; money is protected until actual transaction completion.

Important reminders

1. Tax obligations of foreign owner: A foreign owner of Spanish property is obliged to pay several types of taxes simultaneously. In case of non-payment, debt accumulates, and penalty on the debt amount also grows.

Consequences of non-payment (within a year):

• Denial of residence permit renewal
• Denial of Spanish visa issuance

2. Mandatory insurance with mortgage: When buying a house or apartment with a mortgage, property insurance is mandatory. Basic insurance starts from €80. The most comprehensive, including possible damage to third parties, costs €460 per year.