Worried about recurring costs after buying your dream home in Spain? You are not alone. A common question among property investors is what the total 'Cost of Ownership' amounts to.
The short answer: As a property owner in Spain, you have to take into account fixed charges such as the municipal IBI tax, rubbish tax, community fees (if applicable) and non-residents' tax (Model 210). For an average flat or villa, count on fixed annual costs ranging between 0.8% and 1.5% of market value of the property.
In this article, we provide a detailed breakdown of each cost, so there are no surprises.
Also listen to our podcast episode on the annual cost of a second residence.
1. Municipal property tax (IBI)
The IBI (Impuesto sobre Bienes Inmuebles) is the main annual tax for property owners in Spain, similar to property tax in Belgium.
How much is the IBI? IBI is calculated based on the cadastral value (valor catastral), which is usually a lot lower than market value (often 60-70% of market value). The tax rate varies by municipality, but is legally between 0.4% and 1.1%.
Average cost: On the Costa del Sol and Costa Blanca, you will pay between €300 and €1,000 per year.
When to pay: This varies by municipality (often between August and November).
Expert Insight: "Many buyers forget that the IBI assessment is linked to the owner on 1 January. Are you buying on 2 January? Then legally the seller is still liable for tax for that full year, unless otherwise agreed in the notarial deed."
2. Waste disposal charges (Basura)
The Tasas de Basura is a specific municipal tax for the collection and processing of household waste. Unlike in Belgium, in Spain this cost is often not included in the general municipal tax (IBI).
What are the costs? This is a relatively small, fixed cost. The amount depends on the municipality and the location/category of your property, not directly on the property value.
Target price: Count on approximately € 120 - € 200 per year.
Payment: Often semi-annually or annually via direct debit (SUMA or Patronato).
3. Community charges (Comunidad de Propietarios)
If your property is part of an urbanisation (resort, apartment building or a neighbourhood with shared facilities), you are legally obliged to contribute to the Co-owners' Association.
What are you paying for? This contribution covers the maintenance of common parts such as swimming pools, gardens, lifts, security and the cleaning of common areas.
Cost indication:
Standard urbanisation: €400 - €900 a year.
Luxury resorts (golf, 24/7 security, spa): €2,000 - €6,000+ per year.
Important: Detached villas can also fall under an urbanisation. Always check this during the due diligence phase.
Read more about an urbanisation in Spain.
4. Home insurance
Although a home insurance (seguro de hogar) legally not mandatory for houses without a mortgage, it is strongly recommended to protect your investment against fire, theft and water damage.
Target price: For standard cover (building and contents), count on € 200 - € 500 per year.
Tip: Are you taking out a Spanish mortgage? Then the bank will require you to take out at least fire insurance, often with the bank as beneficiary.
5. Bank charges and direct debits
Managing your fixed expenses used to require a Spanish bank account. Spanish banks often charge non-residents higher commissions.
Costs: Average € 15 to € 40 per quarter for account management.
Optimisation: In regions such as the Costa Blanca, utility companies (such as Iberdrola or Hidraqua) are increasingly accepting European SEPA direct debits through your Belgian or Dutch account. This can save you the cost of a Spanish bank account.
6. Non-Resident Income Tax (IRNR)
This is fiscally the most complex item. As a non-resident, you owe annual tax in Spain, regardless of whether you rent out the property or keep it for your own use only. This is declared via Modelo 210.
Below is the distinction between own use and rental:
Situation A: You do NOT rent the property (Own use)
The Spanish tax authorities consider a second residence as a form of income (in kind). You pay tax on a notional rental income.
Calculation:
The taxable base is 1,1% of the cadastral value (or 2% if the cadastral value has not been revised in the past 10 years).
On this amount, as an EU resident, you pay 19% load.
Calculation example:
Cadastral value: €200,000
Fictional income: €200,000 x 1.1% = €2,200
Tax payable (Modelo 210): €2,200 x 19% = €418 per year.
Situation B: You ARE renting out the property
If you rent, you pay tax on the actual net rental income.
Rate: 19% for EU/EEA residents.
Deductions: You may deduct costs pro rata from the gross rent (insurance, IBI, community fees, depreciation, brokerage commissions).
Declaration: This tax should quarterly to be declared during the periods of rental.
Read more about non-resident tax in Spain.
Frequently asked questions (FAQ)
1. What happens if I don't pay Spanish property tax (IBI)? The Spanish government (Hacienda) or the local service (such as SUMA) can seize your bank account in Spain. In case of prolonged non-payment, an embargo can be placed on the property, making sale impossible and may lead to forced sale.
2. Can I pay all fees with my Belgian bank account? Legally, Spanish entities must accept foreign IBAN numbers through SEPA rules (IBAN discrimination is prohibited). In practice, for local municipal taxes or smaller VMEs, this still sometimes proves administratively difficult. A 'free' online bank account can sometimes offer an intermediate solution.
3. Is non-resident taxation (IRNR) automatic? No, the IRNR (Modelo 210) is a obligation to collect, no obligation to bring. You will not receive an assessment notice in the mail. You (or your tax representative) must proactively do the calculation yourself and file and pay the tax return before 31 December of the following year.
4. What percentage of the house value should I set aside for annual expenses? As a safe rule of thumb, we use 1% to 1.5% of purchase value per year for the total cost package (taxes, insurance, VME and utilities), assuming a flat in an urbanisation.
Here is a budget of the annual cost of a second residence.
About the author: Glenn Janssens is a lawyer specialising in Spanish real estate transactions and tax regulations. Since 2017, he has been helping Belgian and Dutch individuals and entrepreneurs to safely purchase and structure real estate in Spain. He guides files from A to Z: from due diligence, ownership and tax control to estate planning and optimisation for residents and non-residents. Thanks to his years of experience, hundreds of handled files and focus on transparent communication, Glenn makes complex Spanish legislation understandable and practically applicable for every property buyer.
The video below is a summary of this blog created using artificial intelligence.
