Spanish Tax Residency for US Owners of New-Build Property

Purchasing a new-build property on the Costa del Sol presents a wealth of opportunities for US citizens seeking a Mediterranean lifestyle or a sound investment. However, navigating the Spanish tax landscape, particularly the nuances of tax residency, is essential for informed decision-making. This guide, from Life in Costa, details the critical aspects of Spanish tax residency and the associated fiscal obligations for US owners of the developments we recommend in Andalusia.

Understanding Spanish Tax Residency

Spanish tax residency is primarily determined by physical presence and economic ties to the country. For US citizens, understanding these criteria is vital, as becoming a tax resident in Spain means being taxed on worldwide income, rather than just income sourced within Spain.

Criteria for Spanish Tax Residency

An individual is generally considered a tax resident in Spain if any of the following conditions are met during a calendar year:

• Physical Presence: You spend more than 183 days within Spanish territory during a calendar year. Sporadic absences are counted towards this period unless you can prove tax residency in another country.
• Centre of Economic Interests: The main base or centre of your economic activities or interests, directly or indirectly, is in Spain. This criterion can apply even if you spend less than 183 days in Spain.
• Family Ties (Presumption): It is presumed, unless proven otherwise, that you are a tax resident in Spain if your legally non-separated spouse and dependent minor children habitually reside in Spain.

It is important to note that tax residency status applies for the entire calendar year; you cannot be a tax resident for only part of a year in Spain.

The US-Spain Double Taxation Treaty

The Convention between the Kingdom of Spain and the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the US-Spain Double Taxation Treaty) plays a crucial role in preventing US citizens from being taxed twice on the same income. This treaty includes tie-breaker rules to determine residency in cases where an individual might be considered a resident of both countries under their respective domestic laws. For example, capital gains from real estate situated in one country may be taxed in that country.

Taxes for Non-Resident US Property Owners

If you own a new-build property on the Costa del Sol but are not a Spanish tax resident, you are still subject to certain Spanish taxes on income or assets situated in Spain.

Non-Resident Income Tax (IRNR) – Modelo 210

Non-residents must file the Impuesto sobre la Renta de No Residentes (IRNR) using Modelo 210. This applies to various types of income generated in Spain, including:

• Rental Income: If you rent out your new-build property, the net rental income is subject to IRNR. For US citizens, the general tax rate on rental income is 24%. Certain expenses may be deductible for EU/EEA residents, but for US non-residents, deductions are generally more limited.
• Imputed Income: If your property is not rented out, or is only used for personal enjoyment, Spain levies an imputed income tax based on the cadastral value of the property. This is also declared via Modelo 210 and taxed at 24% for US citizens. The imputed income is typically 1.1% or 2% of the cadastral value, depending on when the value was last revised.

Modelo 210 can be presented annually for imputed income, or quarterly for rental income.

Taxes for Resident US Property Owners

Once you become a Spanish tax resident, your tax obligations expand to include your worldwide income and assets. You will typically be subject to Impuesto sobre la Renta de las Personas Físicas (IRPF – Personal Income Tax) and other taxes.

Personal Income Tax (IRPF)

As a Spanish tax resident, you are liable for IRPF on your worldwide income. Income is categorised into general income and savings income, each with its own progressive tax rates. Capital gains from the sale of property are taxed as savings income.

• Capital Gains Tax: Profits from the sale of a property are subject to Capital Gains Tax as part of your savings income, at progressive rates. These rates typically start at 19% for gains up to €6,000, rising to 21% for gains between €6,000 and €50,000, 23% for gains between €50,000 and €200,000, and 26% for gains exceeding €200,000.

Wealth Tax (Impuesto sobre el Patrimonio)

Wealth Tax is an annual tax on net assets worldwide for Spanish tax residents. While it is a state-level tax, autonomous communities like Andalusia can set their own rates and allowances. Crucially, the Junta de Andalucía applies a 100% deduction on Wealth Tax, effectively meaning that residents in Andalusia do not pay this tax. This is a significant advantage for those relocating to the Costa del Sol.

Declaration of Overseas Assets (Modelo 720)

Spanish tax residents are obliged to declare assets held outside Spain exceeding certain thresholds using Modelo 720. This includes:

• Accounts in financial institutions abroad.
• Securities, rights, insurance, and income deposited, managed, or obtained abroad.
• Real estate and rights over real estate located abroad.

This is an informative declaration, not a tax payment, but failure to submit it or providing incorrect information can result in significant penalties if not compliant with general tax law. The obligation to declare applies if the value of assets in any of the three categories exceeds €50,000.

New-Build Property Purchase Taxes

When purchasing a new-build property directly from a developer on the Costa del Sol, specific taxes apply, differing from those for resale properties.

Value Added Tax (IVA)

New-build properties are subject to IVA (Impuesto sobre el Valor Añadido) instead of ITP (Impuesto sobre Transmisiones Patrimoniales). The standard IVA rate for new residential properties in Spain is 10% of the purchase price. This rate also applies to up to two parking spaces and storage rooms if sold alongside the property. For officially protected housing (VPO), a reduced rate of 4% may apply.

Stamp Duty (AJD)

In addition to IVA, new-build property purchases are subject to Impuesto sobre Actos Jurídicos Documentados (AJD), or Stamp Duty, which taxes official legal documents. In Andalusia, the general AJD rate for new-build property transactions is 1.2% of the deed value.

Ongoing Property-Related Taxes

Regardless of tax residency status, all property owners in Spain are subject to annual and event-based property taxes.

Council Tax (IBI)

The Impuesto sobre Bienes Inmuebles (IBI) is an annual municipal tax paid to the local town hall. It is calculated based on the cadastral value of the property, which is an administrative value assigned by the Cadastre office. The tax rate varies by municipality but typically ranges from 0.4% to 1.1% of the cadastral value for urban properties. For example, in Málaga city, the rate is approximately 0.451%. The IBI is payable by the owner of the property as of 1st January each year.

Rubbish Collection Tax (Tasa de Basura)

This is a local municipal fee for refuse collection, varying by municipality and property size/type.

Plusvalía Municipal (Capital Gains on Land Value)

Officially known as the Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana (IIVTNU), this is a municipal tax levied on the increase in the value of the land (not the construction) when a property is sold, inherited, or donated. The calculation considers the cadastral value of the land, the number of years the property has been held, and coefficients set by the local town hall. Taxpayers can choose between an objective calculation method or one based on the actual capital gain realised from the sale, opting for whichever is more favourable. Generally, the seller pays this tax; however, if the seller is a non-resident, the buyer may be held responsible for payment.

Visa and Relocation Considerations

For US citizens looking to purchase property and potentially reside in Spain, visa options are a key consideration:

• Golden Visa (Investor Visa): Until recently, a popular route for non-EU citizens was the Golden Visa, which offered residency rights in exchange for a significant investment, including real estate purchases of €500,000 or more. However, as of April 2025, the real estate investment route for the Golden Visa has been abolished for new applicants. Other investment routes remain available.
• Non-Lucrative Visa: This visa allows non-EU citizens to reside in Spain without working, provided they can prove sufficient financial means to support themselves and their dependents. The minimum required income is equivalent to 400% of the IPREM (Public Income Indicator for Multiple Effects) for the main applicant and 100% of the IPREM for each additional family member. As of 2024, the IPREM is €600 per month, meaning a single applicant needs to demonstrate at least €28,800 per year.

Life in Costa works with trusted legal and financial advisors who can provide up-to-date information and personalised guidance on visa applications and tax planning.