What are the annual costs of a property in Spain? An overview of fixed charges

The purchase price is known. The closing costs have been calculated. But what does the property cost you after that, each year?

We get that question in almost every conversation. And rightly so. Fixed costs determine your net return and therefore whether an investment makes sense.

These are the annual costs of a property on the Costa del Sol, including a calculation example.

1. IBI: property tax

IBI is the Spanish equivalent of council tax. The municipality calculates it based on the cadastral value, which is usually significantly lower than the market value.

For an average apartment on the Costa del Sol, the IBI is often between €300 and €900 per year. For villas, this is higher.

2. Waste collection tax

The municipality charges a separate fee for waste collection, known as the 'basura'. Expect to pay around €100 to €250 per year.

3. Homeowners' association

In an apartment complex or resort, you pay a monthly contribution to the homeowners' association, the 'comunidad'. This covers maintenance, cleaning, gardens, swimming pools, security and insurance for the complex.

The amount varies significantly. From around €80 per month for a simple complex to €300 or more for a resort with a gym, spa and concierge.

Always request the budget and minutes before purchasing. A low contribution with an empty reserve fund is no advantage.

4. Insurance

Building and contents insurance for an apartment typically costs €200 to €500 per year. If you are renting it out, choose a policy that covers rentals.

5. Utilities

Electricity, water and internet. For personal use of a few months a year, this quickly costs €800 to €1,500 per year, depending on size and usage.

6. Non-resident tax

If you do not live in Spain, you pay non-resident income tax (IRNR) on your Spanish property. How this works depends on whether you rent it out.

• If you do not rent it out: Spain calculates a notional income of 1.1% or 2% of the cadastral value. As an EU citizen, you pay 19% tax on this amount. This is done once a year.
• If you do rent it out: you pay 19% on the net rental income. As an EU citizen, you are permitted to deduct costs such as IBI, community fees (VvE), insurance, management, and depreciation.

In the Netherlands, the property falls under Box 3. Under the tax treaty between the Netherlands and Spain, you are generally entitled to a reduction to avoid double taxation. Have a tax specialist calculate this for your specific situation.

A calculation example

Take an apartment worth €400,000 with a cadastral value of €150,000 that you do not rent out. Indicative costs:

• IBI (Property tax): €600
• Waste collection tax: €150
• Community fees: €150 per month, totalling €1,800
• Insurance: €350
• Utilities: €1,200
• IRNR (Non-resident income tax): 1.1% of €150,000 is €1,650, of which 19% is €314

Total: approximately €4,400 per year, roughly 1.1% of the purchase price.

This is an indication. Actual costs depend on the municipality, the complex, and usage.

What this means for your return

Fixed costs are no reason not to buy. They come with every property. However, they must be included in your calculations.

Anyone looking only at gross rent will overestimate the return. Those who include fixed costs know what remains net. Use our rental yield calculator to work it out yourself.

Would you like a specific property calculated, including all costs and taxes? Schedule a consultation with our team.

This article provides general information and does not constitute tax advice. Rules and rates are subject to change.