Current Taxes for Foreign Property Owners in Spain
Under current law, owners of second homes must declare imputed rental income in their Spanish tax return, even if the property is not rented.
Spanish tax residents report this in their IRPF (personal income tax), with a base of 1.1%–2% of the cadastral value.
Non-resident foreign owners (e.g., British, German, Dutch, or American citizens) must file an IRNR (non-resident income tax) return annually. They pay:
- 19% tax if from the EU/EEA
- 24% if from non-EU countries (e.g., UK, USA, Canada)
How Much More Will You Pay?
EXAMPLE: Let’s say you’re a non-resident foreign owner of a property in Costa Blanca with a cadastral value of €200,000:
Current system (1.1%):
- Imputed rental income: €2,200
- Tax at 24% (non-EU resident): €528/year
Under the new law (3%):
- Imputed income: €6,000
- Tax at 24%: €1,440/year
That’s an increase of €912 per year, if you own a property in Spain that you use a few weeks annually and don’t rent out.
For tax residents, the same increase in taxable base could result in hundreds to thousands more, depending on one’s personal income tax rate.
Can You Avoid the New Tax by Renting the Property?
Yes, if you rent the property (particularly long-term) this could exempt it from the imputed income tax. However, short-term holiday rentals (e.g., Airbnb, Booking.com) may not offer full relief, and these are also being targeted under new fiscal changes.
The proposed law includes a VAT increase to 21% on tourist rental income, treating it as a commercial activity. This makes holiday lets less tax-efficient and could shift supply toward the hotel sector, according to some economists.
Will the Law Apply to Inherited or Family-Owned Homes?
Yes. If the property is inherited but not lived in, and remains empty or used occasionally, it will likely be considered a vacant home and taxed under the new rules.
Impact on Foreign Investment and Retirees
This tax proposal has raised concerns among expats, retirees, and foreign investors who own homes for personal use. Many feel it unfairly penalizes occasional use and increases the cost of homeownership in Spain. For non-residents, the administrative burden of filing yearly Modelo 210 tax forms (now with a potential triple tax) adds to the strain.
The law is still in the proposal stage, with no fixed implementation date. If passed, changes could be introduced by late 2025 or 2026. Foreign owners should review their property’s cadastral value, and consider appealing it if outdated. Owners can also evaluate rental options if they want to reduce their tax liabilities in Spain.
In summary: If you’re a foreign property owner in Spain who doesn’t rent out your second home, expect to pay more tax soon (potentially triple) unless you take proactive steps.
