Wealth Tax in Spain: What Property Owners Actually Pay in 2026

Spain’s wealth tax (Impuesto sobre el Patrimonio) is an annual tax on your net assets as of 31 December each year. For tax residents, it covers worldwide assets: property, bank accounts, investments, vehicles, art, jewellery. For non-residents, it covers only assets located in Spain. The tax is collected by the autonomous community where the assets are situated, which for Costa del Sol property means Andalucía. Your property, bank deposits in Spanish accounts, and any shares in Spanish companies all count toward your taxable base.

The critical distinction is between residents and non-residents. If you spend more than 183 days per year in Spain, or if your centre of economic interests is here, you are a tax resident and must declare everything globally. If you are a non-resident, only your Spanish assets are included. In our experience with clients, this distinction alone can swing the tax bill by tens of thousands of euros, because a non-resident who owns only a €1.2M Costa del Sol villa has a much smaller taxable base than a resident with the same villa plus a global portfolio.

The tax is calculated on net assets: total value minus deductions and debts. Mortgages on Spanish property reduce your taxable base directly. A €2M villa with a €1M mortgage counts as €1M for wealth tax purposes. This makes mortgage structuring one of the first conversations we have with clients buying in the €1M+ range.

Andalucía applies the standard state thresholds with its own rate schedule. Every taxpayer gets a €700,000 personal exemption, meaning you only pay wealth tax on net assets exceeding that amount. Tax residents get an additional €300,000 exemption on their primary residence (vivienda habitual), bringing the effective threshold for a resident homeowner to €1,000,000 before any tax applies. Non-residents do not get the primary residence exemption, so their threshold remains €700,000.

The rates in Andalucía for 2026 are progressive. On the first €167,129 above the exemption, you pay 0.2%. From €167,129 to €334,253, the rate is 0.3%. It continues stepping up: 0.5% on the next band, then 0.9%, 1.3%, 1.7%, 2.1%, and finally 3.5% on net assets above €10,695,996. For a concrete example: a non-resident owning a €1.5M property with no mortgage would pay wealth tax on €800,000 (after the €700,000 exemption). The resulting bill is approximately €2,040 per year. On a €3M property with no debt, the annual wealth tax rises to roughly €8,500.

We typically advise clients to run the numbers at purchase time, not after. A buyer considering a €5M villa should know their annual wealth tax exposure before committing, because it is a recurring cost that affects the total holding cost alongside IBI, community fees, and maintenance. At €5M with no mortgage, expect approximately €19,000 per year in wealth tax alone.

This is where wealth tax gets complex. Spanish tax law requires you to declare your property at the highest of three values: the catastral value (valor catastral), the purchase price (valor de adquisición), or the tax-assessed reference value (valor de referencia) set by the Cadastre. Since 2022, the valor de referencia has become the dominant figure for many properties, as the Spanish Cadastre now publishes annual reference values for virtually every property in the country based on market transaction data.

For most Costa del Sol luxury properties bought in the last five years, the purchase price is the highest of the three values and therefore the one you declare. The catastral value is typically 30-50% of market value. The valor de referencia, while closer to market value, tends to lag behind actual purchase prices in prime areas. However, if you bought your property decades ago at a fraction of today’s prices, the valor de referencia may now exceed your original purchase price, increasing your wealth tax base.

One point we stress to clients: improvements and renovations you make after purchase increase the valor de adquisición. If you buy a villa for €2M and then spend €500,000 on a renovation, your declared value for wealth tax becomes €2.5M. Keep all invoices from contractors and architects, because these costs also reduce your capital gains tax base when you eventually sell.

In addition to the standard wealth tax, Spain introduced the Impuesto Temporal de Solidaridad de las Grandes Fortunas (Solidarity Tax on Large Fortunes) in late 2022, initially as a two-year temporary measure. It has been extended and applies in 2026 to individuals with net assets exceeding €3,000,000. This is a state-level tax designed to ensure that wealthy individuals in regions that had abolished or reduced wealth tax (such as Madrid) still contribute. In Andalucía, where wealth tax applies normally, the Solidarity Tax functions as a top-up that prevents regional reductions from fully eliminating the obligation.

The Solidarity Tax rates are: 1.7% on net assets between €3M and €5.3M, 2.1% between €5.3M and €10.7M, and 3.5% above €10.7M. Crucially, you can deduct the wealth tax already paid from your Solidarity Tax liability. In practice, for most Andalucía-based taxpayers, the Solidarity Tax only adds a marginal amount on top of the wealth tax they are already paying, because Andalucía’s rates are close to the Solidarity Tax rates. The real impact falls on taxpayers in Madrid, which has historically bonused wealth tax to zero.

For our clients with assets above €3M, we recommend a combined analysis. A tax advisor should calculate both the wealth tax and Solidarity Tax together to determine the effective rate. At €4M in net assets, the combined annual tax in Andalucía is approximately €14,500. At €8M, it rises to roughly €52,000. These are material holding costs that need to be factored into any long-term investment model.

The most direct reduction strategy is mortgage financing. Since mortgages on the property reduce your taxable base euro for euro, a €3M property with a €1.5M mortgage is assessed at €1.5M for wealth tax purposes. Even if you have the cash to buy outright, taking a mortgage can save more in wealth tax than the mortgage interest costs. At current rates of 3.5-4% for non-resident mortgages, the interest on €1M of borrowing is roughly €35,000-40,000 per year. If that €1M of mortgage reduces your wealth tax by €5,000-12,000 annually, the pure tax saving covers a significant portion of the interest cost.

Joint ownership between spouses is another effective tool. Each spouse gets their own €700,000 exemption and, if resident, their own €300,000 primary residence exemption. A couple who owns a €2M property jointly (50/50) each declares €1M, applies their €700,000 exemption, and pays tax on just €300,000 each. The combined tax bill is substantially lower than one person declaring the full €2M. We see this regularly with couples where one spouse initially buys alone and then adds the other to the title deed later, specifically for wealth tax optimisation.

Other strategies include ensuring all legitimate debts are declared (loans, tax liabilities, community fee arrears), correctly valuing any moveable assets like vehicles and jewellery (which should be declared at market value, not replacement cost), and for residents, maximising pension plan contributions which reduce the taxable base. We always recommend clients work with a fiscal advisor (asesor fiscal) who specialises in non-resident or expat taxation, because generic accounting firms often miss deductions specific to international property owners.

Non-residents declaring Spanish wealth tax face a narrower scope but fewer deductions. On the plus side, only Spanish-located assets count, so your global property portfolio, bank accounts, and investments outside Spain are excluded entirely. On the minus side, you cannot claim the €300,000 primary residence exemption (because a non-resident by definition does not have a vivienda habitual in Spain), and you cannot offset debts unrelated to Spanish assets against your Spanish taxable base.

Residents face the full scope of worldwide assets but benefit from more deductions. The €300,000 primary residence exemption is significant for someone whose main home is on the Costa del Sol. Additionally, residents can offset all worldwide debts (mortgages on foreign properties, business loans, personal loans) against their total asset base. For a resident with €5M in global assets but €2M in worldwide mortgages, the taxable base is €3M minus exemptions, regardless of where those debts are located.

There is a third category that catches some buyers: non-residents who own Spanish property through a foreign company. In this scenario, the individual does not directly own Spanish real estate; they own shares in a foreign entity that holds the property. Spain’s anti-avoidance rules include look-through provisions for entities whose primary asset is Spanish real estate, meaning the individual must still declare the underlying property value. We advise clients considering corporate ownership to get specialist tax counsel before proceeding, as the rules have tightened considerably since 2022.

Wealth tax is filed annually using Modelo 714, alongside your income tax return. The filing period typically runs from April to June for the previous calendar year. For example, your 2025 wealth tax (based on assets as of 31 December 2025) is filed between April and June 2026. The Solidarity Tax, if applicable, is filed separately using Modelo 718 during the same period. Both can be filed electronically through the Agencia Tributaria website with a digital certificate or Cl@ve PIN.

Non-residents who do not have Spanish income tax obligations may still need to file Modelo 714 if their Spanish assets exceed €2,000,000 (even if the tax due is zero after exemptions). This catch-all provision is an information requirement, not necessarily a tax obligation, but failing to file carries penalties. The penalty for late filing with no tax due is €200. For late filing with tax owed, the surcharge starts at 5% for the first three months, rising to 20% after twelve months, plus interest. Deliberate non-filing can trigger penalties of 50-150% of the tax due.

We see a recurring issue with non-resident clients who bought property years ago and never filed Modelo 714 because they were unaware of the obligation. The good news is that Spain has a voluntary regularisation process. Filing late and paying the tax plus a surcharge is far cheaper than being caught by a tax inspection, which can go back four years (six years in some cases). If this applies to you, address it proactively through a Spanish tax advisor.