Owning property in Spain: taxes and running costs – a complete guide with examples

How much will it cost you to own real estate in Spain? Bills, taxes, mortgage fees and costs, unplanned expenses.

Understanding the costs of owning a home in Spain

The maintenance of real estate in Spain is an important aspect that should be taken into consideration before your deal.
Housing costs
Although in terms of housing costs it's hard to call Spain expensive country, it may be tricky to figure out what you pay for.
All expenses are divided into two parts.
1
First, these are fixed payments, which will have to be made even for empty housing; taxes, insurance, maintenance of the house and local area (cleaning, garbage disposal, etc.).
2
Secondly, these are variable payments, depending on the set of chosen services and consumption; utility payments (water, electricity, gas) and communication (internet, telephone, television).
Required documents for opening a bank account in Spain
These costs depend on the region, the type of housing and location. In this article, you will see some examples of the annual running costs.
Average annual property maintenance cost
(basic expenses in EUR):

2. Utility bills

Comunidad (Community charge)
Residents of apartment buildings or residential complexes pay for housing services: cooperative (Comunidad) rendered by the selected company. Usually, a set of services includes, cleaning the entrance and nearby territory, lighting, repair of elevators, lawn care, security, and garbage collection (sometimes paid separately). As a rule, annual fees range from 200 to 1500 euros. In luxury complexes with developed infrastructure (with tennis courts, spa, gym, restaurant, swimming pools, and jacuzzi), the annual fee can be even higher.

Private housing residents can hire a property management company, or they can pay for various specialist services separately, for example, a gardener, cleaner, pool cleaner etc. However, you can do it yourself, meaning that the only major expense will be garbage collection, which will be around 120 euros per year.
Water
The fee for subscriptions for connecting to the water supply is around €60 per year, regardless of whether you live here or not. Water is paid progressively, the more you use, the higher the fee. An example of this is, in Valencia, for two months, the first 15 cubic meters is €0.44, for the next 15 it will be €0.66, the next 20 will equal to €1.78, etc. Two to three people are sufficient of using 15 cubic meters.
Electricity
The subscription fee for connection to the power grids is also about 60 euros per year. Electricity consumption in Spain costs on average 0.24 euros per kWh, which is more expensive than in many European countries. However, modern houses are usually energy efficient, you can read about classification in terms of energy rating here.
Gas
The average price of gas for consumers in Spain is 0.09 euro per kWh. Gas is used mainly not for cooking, but for heating of house and water. Water heating alone costs at least 200 euros per year.
Heating
Heating of two-bedroom apartments with gas will require 200 euros for each winter month. Use for air conditioner heating (electricity) is a bit expensive. In the issue of heating, one must consider the Spanish climate. If you buy housing in the north, then there is a heating season from November to March, and if in the Canary Islands, it is only a couple of months (there is no central heating, the problem is solved by electric heaters).
Telephone, internet, TV
Typically, Spanish providers offer property owners to conclude the combined contract for telephone, internet, and television. For example, a phone with unlimited calls to all mobile numbers in Spain, internet on speeds up to 120 Mb/s, and an expanded package of TV channels will cost about 500 euros per year.
Rubbish Collection Tax
Rubbish collection tax is paid by both residents and non-residents. The municipality charges it once a year. On average, this tax will amount to around 100-200 euros.
Cleaning and domestic help
The cleaning service in Spain usually costs between 7-10 euros per hour. The average villa requires 6-8 hours of cleaning, so totally it is 42-80 euros per cleaning. One month of weekly cleaning will cost you from 150 euros.
Pool and garden maintenance (gardener)
Pool plus garden maintenance, on average, costs 130-250 euros per month. Again, it all depends on the area of both, the amount of green space, which should be looked after. If you have a large landscaped garden with numerous flowers, then you will have to pay over 300 euros per month for the care.

3. Property Taxes

Taxes
  • Municipal property tax (Impuesto Sobre Bienes Inmuebles) is from 0.4 to 1.1% of the cadastral value of the real estate, which is usually several times lower than the market value. Depending on whether it is an apartment or a house, the average tax ranges from 100 to over 2000 euros per year.

  • Property income tax (Impuesto Sobre la Renta de las Personas Fisicas), is equal to 24% (or 19% for any Residents of the EU, Iceland and Norway), and is charged on an amount equal to 2% of the cadastral value of housing (or 1.1% if, since 1st January 1994, the cadastral value has been revised). In recalculation, the tax amount is 0.48% or 0.265% of inventory. If the cadastral value has changed since 1994 then the lower rate applies. A tax of 24% is charged if the property is rented, not on the cadastral value, but from all received rent. This tax must be paid whether or not you let your Spanish property if it is your second home!
    How is this tax charged?
    The cadastral value of the property is multiplied by 2% (or 1.1%) i.e. only 2% (1.1%) of the property value is taxable. Furthermore, this "tax base" is multiplied by the corresponding tax rate, which varies for residents and non-residents of the EU or the EEA:

    EU residents –19.5% (for 2015) and 19% (for 2016)
    non-EU residents - 24%
    For example, if you are not a resident, and the cadastral value of your apartment is € 72.000, then, you will be charged € 190 (72000 × 1.1% × 24% = € 190).
    • Wealth tax (Impuesto sobre Patrimonio). In the coming years, experts believe that this type of tax will be abolished. Currently, if you have any assets in Spain amounting to € 700,000 or more, you are required to pay to the treasury the amount that is calculated according to the following scale; 0.2 - 3.03% of the net asset value. The interest rate depends on the region where the property is located.

    4. Insurance

    Formally, you are not obliged to insure your property, this is because, according to Spanish law, it is not necessary, unless, it is a mortgage. In this case, insurance is mandatory. An insurance contract will protect against possible damage in case of a fire, natural disasters, and other accidents. This service costs an average of 300-350 euros per year and depends on property value.

    We still advise not to skimp. The human factor and accidents play their roles. You can be robed, fire can break out, there are always certain risks. In order for the owners to sleep well, in Spain, as in other countries, there is the Seguro de Hogar (home insurance).
    The most popular basic package includes the following insurance cases
    How much is the basic insurance tariff?
    It depends on many factors; the type and size of housing, district, year of construction, type of residence and other things.

    The cost of an apartment in euros is calculated using an automatic calculator. Sometimes this sum is lower than the one you spent on your property. In case of an insurance claim, a specialist in the insurance company determines the value of the contents of the house or apartment (furniture, household items, jewels, cash, etc.), as well as, damage to compensate.

    For the calculation, we take the average apartment in Alicante. Not the first and not the last floor, the year of construction is not older than 1980, and the area is 80 square meters. Cost of furnishing is 20 thousand euros.

    Basic Seguro de Hogar liability insurance package for such an apartment will cost approximately 125-135 euros per year. For this amount, you can rely on 100 percent indemnification under the guarantees of the insurance contract, and in the case of complete destruction of property, compensation for the cost of restoring the housing and its contents is prescribed in the insurance contract.

    Any insurance contract in Spain is concluded for a year and is automatically updated on the next 12-month period. If you have an intention to terminate the contract, you must inform the company in advance, 1-1.5 months before the date of the contract renewal.
    There are more popular types of property insurance,
    which you can see in the table below:
    To buy insurance we advise you to contact major Spanish and international companies with offices in the country:
    Grupo Catalana, Mapfre, Generali, Zurich.

    5. Mortgage fees and costs

    When you take a mortgage, the property you are buying is pledged to the bank and it is the guarantor of the payment of the loan.
    Mortage fees
    Therefore, the interest rate of a mortgage loan is much lower than other types of loan.
    Usually, the interest rate on a mortgage loan is around 3% -3.4%.
    Additionally, the following expenses will be required for a mortgage:
    • Commission for opening a loan (1.5% of the loan amount).
    • Bank valuation of property - approximately 300 euros.
    • Obligatory insurance, around 200-300 euros per year. At the same time, in the first year of lending, the bank, as a rule, requires health insurance for the loan recipient.

    If you choose a mortgage with a variable rate, then be ready for the fact that it may change. A variable rate is a pretty risky option. The percentage of it in a different period of time can be both declining and growing.

    Depending on the bank, every 6 to 12 months, recalculation is implemented, which is based on official market indicators. In Spain, this index is called Euribor, which is used throughout the EU. In most cases, this rate is chosen by those who receive a stable income.

    All in all, issuing a mortgage loan incurs an additional cost of 1-2% of the property value. So, when buying property with a mortgage, the total mortgage cost is 13-14% of the cost of housing for the property of secondary market and 14-15% for new housing (a 1-2% increase due to the Stamp Duty).

    6. Other hidden ongoing costs

    As it was described earlier, residents of apartments with a communal area (swimming pool, garden, gated parking, common stairwell, basement, courtyard) will have to pay comunidad of € 300-800 per year for the maintenance of the complex. For detached villas, this amount depends on the degree of urbanization (garbage collection, security, cleaning of the adjacent area, road lighting) and ranges from € 500 to € 1,500 per year. In elite complexes with developed infrastructure (tennis courts, sauna, gym, restaurant, swimming pool) the annual fee can be several times higher.

    Weekly gardener's work will cost the owner of a private house € 80-200 per month (depending on the size of the plot), pool cleaning (once a week) - € 50-120 per month; house cleaning € 7-10 per hour.

    Usually, in residential complexes, there are parking places for sale and people buy them to rent out. If you decided not to buy a parking place, but to rent, be ready to pay from 100 euro per month.

    7. Unplanned expenses

    Property that requires renovation is often more affordable and gives owners the chance to modify and design it to their taste. We recommend you to be careful when choosing the contractor to conduct the repair.

    In the country of bullfighting, there is the concept of "estimate of work", which Spanish companies are required to comply with. If you have agreed on a specific cost of works, this procedure will not cost you a penny more.

    The average cost of repairs in Spain ranges from € 1,250 to € 2,500 per sq. m. This price includes all possible approvals.

    Almost any Spanish company will also offer you designer services. In the most high-status companies, Italians still remain at a position of the designer. It is still commonly believed that no one can compare with them in this matter. Design project of an apartment of 50-70 square meters of such a high-class specialist will cost around € 10-15 thousand.

    Anyways, any property needs repair from time to time, including unexpected expenses (flood, plumber, repair something, painting a wall, maintenance of boilers, replacement of plumbing, etc.)
    Average repair prices in Spain

    8. Management company fees

    If the owner cannot reside permanently in Spain, it is worth using the services of a management company. Management companies take over the payment of bills for electricity and water consumption, subsequently collecting it from the owner, securing the property and cleaning the communal areas.

    When buying an apartment in a modern complex, it will be easy to find such a company, since they are usually established by the developer. In Spain, the services of the management company are cheaper than in the rest of Europe. Often, the fee is taken not per square meter, but per unit of housing and amounts to € 1 per day (€ 365 per year).

    There are companies that calculate the cost of their services based on the built area, but then the cost per square meter decreases depending on the size. A year goes from € 6 to € 15 (on average € 8.4) per sq. m. You can also agree on cleaning a private apartment for additional money

    9. Conclusion

    How much does it cost to maintain an apartment in Spain?
    How much does it cost to maintain a villa in Spain?
    The cost of maintaining the house depends on the size of the villa and garden, pool availability, the number of people living there and other factors.
    Estimated annual costs for a detached villa (outside the complex):
    The cost of maintaining a property in Spain can be substantial, but it can be reduced by economical consumption, as well as if you live there only in high season and don't use communication services.
    • Delay of the bank decision to issue the mortgage
    • For some strong reasons when the buyer cannot make a payment
    • If the buyer has found some problems with the condition of property that need to be repaired, or to demand a refund
    • If the notary is not satisfied with the package of documents provided
    In case of an off-plan property, there may be delays in the deadline of construction. That is why the deed of sale may be signed a bit later. But do not worry, the payment installments (specified in the arras) will be held on the escrow and there is no possibility that your money will be taken before the actual sale.
    Important to remember:
    1
    The foreign owner of Spanish property will have to pay several types of taxes at once. If you do not do this, the debt will accumulate, and the penalty for the amount of debt will also grow. Possible consequences of non-payment of taxes for a period of one year: refusal to extend a residence permit, refusal of issuing a Spanish visa.
    2
    If you purchased a house or apartment with a mortgage, the property insurance is mandatory. The basic insurance starts at € 80. And the most complete, including the possible damage caused to third parties, costs € 460 per year.
    For more information please contact the managers of our agency. It is our pleasure to assist you on a way to your dream!

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