Buying Property in Spain 2026, Taxes Explained for Costa Blanca Buyers

Property taxes on the Costa Blanca comprise several components: IBI (annual local tax), Non-Resident Income Tax (IRNR), and potential Wealth Tax for high-net-worth individuals. When selling, Capital Gains Tax applies to profits, and Inheritance Tax varies significantly by region. In the Valencia region (Costa Blanca), 2026 brings favourable 99% allowances for close family members regarding inheritance.

People across the world dream of the possibility of moving to the beautiful and sun-kissed region known as the Costa Blanca North. The regulations that constitute tax costs when buying property in Spain currently apply in all autonomous communities, including the Valencia region of Spain, which includes the coastal towns of Javea, Denia, Calpe, and Altea. These property taxes in Spain sometimes cast a shadow of concern in the minds of new residents and foreign nationals considering buying property.

Here, we’ll explore all the information you need to consider regarding tax costs when buying property in the Costa Blanca, specifically for 2026. We explore in full detail the Annual Local Rates (IBI), Non-Resident Liability (IRNR) and Inheritance Tax.

Common Misunderstandings of Paying Property Taxes in Spain

“I don’t rent it out, so I don’t pay income tax.” See also IRNR Non-residents have to pay what is called a “deemed” income tax even if the shutters are closed all year.

“I’ll just pay the tax in my home country.” Unfortunately, the double taxation agreements (DTAs) that exist between tax authorities mean, in almost every instance, that the property will be taxed in the country where it is physically situated.

“The Cadastral Value is the same as the Price.” Many owners are pleasantly surprised to find their IBI is based on a value far lower than what they paid for the home.

“Inheritance tax is 100% free.” While the 99% discount in Valencia is amazing, it only applies to close relatives. Siblings, cousins, and “unmarried partners”

IBI Tax in Spain: How It Works in Costa Blanca

IBI Spain explained: the most recurring annual expense you will have to face in Spain is the IBI (Impuesto sobre Bienes Inmuebles). A bit like your council tax or the property rates at home. More specifically, it’s a municipal tax to be paid once a year to the local Town Hall (Ayuntamiento).

How is it calculated?
It is based on the Cadastral Value (valor catastral) of each property. The Cadastral Value is the official valuation given by the State to each estate, urban and rustic, and in most cases it is much lower than the real estate market value.

Rates
The rates in each municipality vary, generally falling in the range of 0.4% and 1.1% of the cadastral value.

Who pays?
The property owner on January 1st of any given year is held responsible for the annual tax, although when a sale is made, the charges are often shared more or less equally between the buyer and seller during the notary act.

Pro Tip: Set up a standing order (domiciliación bancaria) for your IBI as late charges start at 5% and rise to 20%.

IBI Property Taxes Rates in Javea, Denia, Moraira and Calpe
The table below outlines the different rates in some of the Costa Blanca’s most popular areas for home buyers. Denia currently has one of the highest IBI rate on the Costa Blanca.

Source: Official SUMA Portal

Non-Resident Property Tax on the Costa Blanca (IRNR Explained)

Non-resident tax Spain property 2026. If you own a second home in Spain and you are not physically residing in Spain for more than 183 days in any tax year and also do not rent out your second home, you will be charged with an annual liability (known as the “presunto” – the name given to the assessed annual charge which is imposed and the term deemed is sometimes used in lieu of assessed) for income tax on what is deemed as deriving income or a benefit for owning the home and being able to live there from time to time when wanted. 

The Government’s views are that home ownership – especially of second homes – is a luxury privilege for the use of owners, conferring clear benefit for which a tax charge is levied.

• EU/EEA Citizens: You will pay 19% on a small portion of the land tax, which is always a small percentage, about 1.1% or 2% of the cadastral value.
• Non-EU Residents (e.g., UK, USA): Pay 24% on that same base.

Note: If you choose to rent your property, you will pay tax on your actual rent received.

The 3% Withholding Rule

Non-resident sellers should be aware that buyers have to withhold 3% of the purchase price of the property and pay it to the Spanish Tax Authority.

This is a warranty in case the seller does not pay the Capital Gains Tax due. Once the Capital Gains Tax has been calculated and paid by the vendor, they can ask for a refund if the amount withheld by the buyer is higher than the amount due. In the opposite case, they have to pay the difference to the Tax Authority. Many foreigners get caught out by this part of property taxes in Spain. 

Wealth Tax Spain 2026 Thresholds

A so-called “wealth tax” on the net worth of your assets is also a component of property taxes on the Costa Blanca. 

Thresholds: For 2026, the regions of Valencia (Costa Blanca) have proved to be the most affordable. In addition to a personal allowance of €1,000,000, there is an extra €300,000 for your main residence.

Non-Residents: Will only be taxed on assets they own in Spain. The standard relief in Spain is €700,000. If the value of a property minus any mortgage held over it exceeds this threshold, a Wealth Tax return will likely need to be made.

Capital Gains Tax Spain Property Sale

If you decide to sell your Spanish property, the Taxman will come calling in relation to the profit you make from the transaction.

How is it calculated?
Non-Residents: You will usually pay a flat rate of 19% on the gain (the amount between the purchase and sale prices).

Residents: Pay on a sliding scale:

Up to €6,000: 19%

€6,000 – €50,000: 21%

€50,000 – €200,000: 23%

Over €300,000: Up to 28%

Inheritance Tax Valencia Spain (99% Reduction Explained)

Inheritance tax in Spain (Sucesiones) is governed by national and local laws. In general, the Costa Blanca has one of the lowest rates of inheritance tax in Europe.

The regional government in the Valencian Community recently approved a tax reduction of up to 99% for Group I and II beneficiaries, which include spouses, children and parents. As long as the relevant paperwork is submitted within the six-month period, the tax will amount to almost nothing for immediate family members.

Important: Although there will be no tax to pay due to the 99% reduction, you are still required to make a tax declaration to the authorities in order to complete the transfer of ownership.

(not registered as pareja de hecho) may face significantly higher rates.

Thinking of buying in Jávea, Moraira, Altea or Denia? Contact us today, and we can estimate your exact tax exposure before you commit. 

Annual Costa Blanca Property Tax Examples (2026)

FAQs

Is property tax in Spain higher for non-residents? 

Not necessarily for the IBI (local tax), but non-residents pay the IRNR (Non-Resident Income Tax), which residents do not pay on their main home. However, residents are taxed on their worldwide income, so the “best” status depends on your overall financial profile.

What expenses can I deduct from Capital Gains Tax?

You can deduct notary fees, land registry fees, legal fees, and VAT/ITP paid at the time of purchase. You can also deduct the costs of major “structural” improvements (like a new pool or an extension) if you have the official IVA invoices.

When is the deadline for IBI in the Costa Blanca?

It varies by town. For example, in many Alicante municipalities, the “SUMA” office handles collection, usually between July and September. Always check with your local town hall.

Do I need a Spanish lawyer to pay my taxes?

While not legally mandatory, it is highly recommended. A Gestor or lawyer ensures you are using the correct forms (like Form 210 for non-residents) and meeting regional deadlines.

What happens if I don’t pay my property taxes in Spain?

The Spanish Tax Agency (Hacienda) is very efficient. They can place a lien on your property, freeze your Spanish bank account, or apply significant interest and late-payment penalties.