Tax Benefits For Real Estate Investors In Spain

Published on October 23, 2025 and written by Cyril Jarnias

Spain has long been a favored destination for foreign real estate investors, particularly French investors. Beyond its sunny climate and art of living, the country offers a particularly attractive tax framework for real estate investors. This article details the tax benefits you can enjoy when investing in Spanish real estate, along with a comparison to other popular destinations.

Advantageous Local Taxation: The Well-Kept Secret of Spanish Real Estate

Spanish local taxation offers several advantages for real estate investors, whether residents or non-residents. Here are the main benefits to know:

1. Attractive Rental Income Tax

In Spain, rental income is subject to an advantageous tax rate, particularly for non-residents. Unlike France where this income can be taxed up to 45%, Spain applies a fixed rate of 19% for European Union residents and 24% for non-EU residents. This significant difference can represent substantial savings for investors.

2. Lower Taxed Real Estate Capital Gains

Taxation of real estate capital gains is also more favorable in Spain. The tax rate ranges between 19% and 23% depending on the gain amount, compared to rates reaching up to 36.2% in France. Additionally, Spain offers holding period allowances that can significantly reduce taxation.

3. No Property Tax

Unlike France where property tax was only recently eliminated for primary residences, Spain does not have this tax. This absence represents significant savings for property owners.

4. IBI: A Lighter Property Tax

The Spanish equivalent of property tax, Impuesto sobre Bienes Inmuebles (IBI), is generally lower than in France. Its rate varies by municipality but averages between 0.4% and 1.1% of the property’s cadastral value, which is often below market value.

International Taxation: When Spain Plays the Attractiveness Card

Spain has signed numerous international tax treaties, including one with France, aimed at avoiding double taxation and facilitating cross-border investments. Here are the main points to remember:

1. French-Spanish Tax Treaty

The tax treaty between France and Spain prevents double taxation of real estate income. Specifically, if you are a French tax resident and receive rental income in Spain, you will be taxed in Spain but can deduct this tax from your French tax liability.

2. Tax Credit

For French tax residents, tax paid in Spain on real estate income qualifies for a tax credit in France. This mechanism neutralizes double taxation while benefiting from advantageous Spanish rates.

3. Simplified Declaration for Non-Residents

Spain has implemented a simplified declaration system for non-residents owning real estate properties in its territory. This procedure, less complex than in France, facilitates administrative processes for foreign investors.

4. Partial Inheritance Tax Exemption

Certain Spanish autonomous communities, such as Andalusia or the Community of Madrid, offer significant inheritance tax exemptions for non-residents. These benefits can reach up to 99% reduction, making Spain particularly attractive for real estate inheritance planning.

IBI and Local Taxes: A Lightened Tax Burden for Property Owners

In Spain, real estate owners are subject to various local taxes, the main one being Impuesto sobre Bienes Inmuebles (IBI). Here’s an overview of these taxes and their particularities:

1. IBI: An Adjustable Property Tax

IBI is the equivalent of the French property tax. Its rate varies by municipality, generally between 0.4% and 1.1% of the property’s cadastral value. This value is often below market value, making IBI less expensive than its French equivalent in many cases.

2. No Property Tax

Unlike France, Spain does not levy a property tax. This absence represents significant savings for property owners, whether they occupy their property or rent it out.

3. Garbage Collection Tax

This tax, similar to the garbage collection tax in France, is generally included in IBI or billed separately depending on the municipality. Its amount remains moderate compared to other European countries.

4. Real Estate Wealth Tax

Spain applies a real estate wealth tax, but with high exemption thresholds (up to €700,000 depending on regions) and relatively low progressive rates. Additionally, certain autonomous communities, like Madrid, have practically eliminated this tax.

5. Homeowners Association Fees

Although not strictly part of taxation, homeowners association fees in Spain are generally lower than in France, particularly due to lower maintenance and upkeep costs.

Spain vs Other Destinations: A Tax Haven for Real Estate?

To better appreciate the tax advantages of real estate investment in Spain, it’s interesting to compare its taxation with other popular destinations among French investors.

1. Spain vs France

• Rental income: 19% in Spain vs up to 45% in France
• Capital gains: 19-23% in Spain vs up to 36.2% in France
• Property tax: generally lower in Spain (IBI)
• Property tax: non-existent in Spain, recently eliminated in France for primary residences

2. Spain vs Portugal

• Rental income: similar rates (NHR regime in Portugal)
• Capital gains: more advantageous in Spain (28% in Portugal)
• Wealth tax: more favorable in Spain (eliminated in Portugal but replaced by luxury real estate tax)

3. Spain vs Italy

• Rental income: more advantageous in Spain (up to 43% in Italy)
• Capital gains: similar rates
• Property tax: generally lower in Spain

4. Spain vs Greece

• Rental income: more advantageous in Spain (up to 45% in Greece)
• Capital gains: similar rates
• Property tax: comparable, but simpler system in Spain

Conclusion: Spain, A Tax Haven for Real Estate Not to Be Overlooked

Spain offers a particularly advantageous tax framework for real estate investors, whether residents or non-residents. With attractive tax rates on rental income and capital gains, generally lighter property tax than in France, and no property tax, the country positions itself as a prime destination for real estate investment in Europe.

International tax treaties, particularly with France, reinforce this attractiveness by simplifying tax management for foreign investors. Additionally, certain Spanish autonomous communities offer additional tax benefits, particularly regarding inheritance taxes, making real estate investment in Spain even more interesting for inheritance planning purposes.

Compared to other popular destinations like Portugal, Italy, or Greece, Spain stands out with its generally more advantageous taxation and simpler, more stable tax system. These advantages, combined with a dynamic real estate market and still attractive prices in certain regions, make Spain a top choice for real estate investors seeking tax optimization.

However, it’s important to note that taxation is just one aspect among others to consider when making a real estate investment. Property quality, location, capital gains potential, and economic prospects of the chosen region remain essential criteria to ensure the success of your investment.