Buying Property in Costa del Sol – Essential Guide for Foreign Buyers

Mortgages for Non-Residents

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Foreign buyers can obtain mortgages from Spanish banks, even if they are not EU residents.
Typically, banks offer:

• Up to 60–70% of the property’s appraised value (not the purchase price)

• Terms of up to 20–25 years

• Fixed or variable interest rates

It’s highly recommended to get a pre-approval before signing a reservation contract.

Annual Property Taxes for Non-Residents

Even if you don’t live in Spain permanently, you must pay certain annual property-related taxes as a non-resident owner:

• IBI (Property Tax): a yearly local tax based on the cadastral value (valor catastral).

• Waste collection and local service fees: charged by your local town hall.

• Non-Resident Income Tax (IRNR): applied either to rental income or to a notional income if the property isn’t rented out.

• Community Fees: payments to your building or urbanisation’s homeowners’ association.

 

Understanding the IRNR (Non-Resident Income Tax)

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The IRNR (Impuesto sobre la Renta de No Residentes) is the Spanish tax applied to income earned by people who do not live in Spain but own property here.
If you live abroad and own a Spanish property, you are required to file this tax even if the property is empty.

There are two main cases:

a) If You Don’t Rent Out the Property

Even if you never rent it, the Spanish Tax Agency assumes a small “fictional income,” called imputed income.
It’s based on the property’s cadastral value (valor catastral).

Calculation formula:

• 1.1% of cadastral value (if updated in the last 10 years)

• 2% if not updated recently

You then apply the tax rate that corresponds to your country (see below).

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b) If You Rent Out the Property

If you rent your property (short-term or long-term), IRNR applies to your rental income.
Depending on where you live, you might pay on your net or gross income.

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IRNR Tax Rates in 2025

Country of ResidenceEU / EEA Member?Tax RateExpense Deductions

EU / EEA (e.g. Denmark, France, Germany, Norway, Iceland)

19%– you can deduct costs like maintenance, insurance, and management fees

Non-EU/EEA (e.g. UK, USA, Canada, Switzerland, UAE, China)

24% - you cannot deduct costs like maintenance, insurance, etc.  – tax applies to the full gross income

 

Examples

Example 1: Non-Rental Property
Your apartment in Estepona has a cadastral value of €200,000.

•  If you’re from Norway (EEA):
  1.1% × €200,000 = €2,200 → 19% = €418 annual IRNR

•  If you’re from the UK (non-EU/EEA):
  1.1% × €200,000 = €2,200 → 24% = €528 annual IRNR

 

Example 2: Rented Property
You rent your Marbella apartment for €1,500/month (€18,000/year).

• From Denmark (EU) – can deduct expenses:
  Net income €12,000 → 19% = €2,280

• From the USA (non-EU) – cannot deduct expenses:
  Gross income €18,000 → 24% = €4,320

 

How and When to Pay IRNR

• Declared annually if the property is not rented.

• Declared quarterly if the property is rented.

• Filed using Modelo 210, online or through a local tax representative.

Most non-resident owners use a gestor or lawyer to handle this — it’s affordable and ensures compliance.

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Penalties for Not Paying IRNR

If the Spanish Tax Office detects unpaid IRNR (often when selling or transferring the property), they can:

• Charge the unpaid tax with interest

• Impose fines (50–150% of the amount due)

• Delay or block the property transaction

 

Spanish Will (Testament)

Foreign property owners are strongly advised to sign a Spanish will for assets located in Spain.
It greatly simplifies inheritance procedures and avoids legal conflicts between jurisdictions.

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Buying in Your Own Name vs Through a Company

Some investors consider buying through a Spanish limited company (Sociedad Limitada – SL) for tax or inheritance reasons.
However, this is not always beneficial, depending on:

• Your country of residence

• Property type and usage

• Whether it’s for personal or rental purposes

Always consult an international tax advisor before deciding.

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Home and Liability Insurance

Home insurance isn’t mandatory unless you have a mortgage, but it’s strongly recommended.
A solid policy covers:

• Fire, water, and theft damage

• Public liability (e.g. neighbour damage)

• Optional 24/7 home assistance

 

Post-Sale Management and Maintenance

Non-resident owners often need support with:

• Rental management

• Maintenance and cleaning

• Bill payments and tax filing

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Document Translation

All official documents (contracts, powers of attorney, certificates, etc.) must be in Spanish or officially translated by a sworn translator (traductor jurado) certified by the Spanish Ministry of Foreign Affairs.

 

Legal and Tax Advice

Buyers should always hire an independent lawyer specialised in Spanish real estate law.
The lawyer will:

• Verify ownership and debts

• Request your NIE

• Handle notary and land registry formalities

• Explain international tax implications

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Anti-Money Laundering Controls

Spain enforces strict anti-money laundering (AML) laws.
Buyers must provide evidence of:

• The lawful origin of their funds

• Traceable bank transfers

• Supporting financial documentation

Having this ready avoids unnecessary delays.

Timeline 

The full process typically takes:

• 4–8 weeks if all documents and funds are ready

• 8–12 weeks if you need a NIE, bank account, or mortgage approval