Wealth Tax in Spain: What British Property Owners on the Costa del Sol Need to Know (2026)
Most British buyers research stamp duty, CGT and mortgage costs before buying in Spain. Very few check whether they will owe wealth tax every year they own the property. For a Costa del Sol villa worth £800,000 or more, that oversight can get expensive.
Spain actually runs two separate wealth taxes. The regional government abolished one of them in Andalusia. The central government then invented a second one specifically to catch people who thought they had escaped. Here is how both work, who they catch, and what a British non-resident actually pays.
Two Taxes, Not One
Impuesto sobre el Patrimonio (IP) is Spain’s longstanding annual wealth tax. It has been on the books since 1977. It applies to your worldwide assets if you are a Spanish resident, and to your Spanish assets only if you are a non-resident. Andalusia introduced a 100% bonification (effectively a full rebate) in 2022, meaning anyone taxed under Andalusia’s authority pays zero.
Impuesto Temporal de Solidaridad de las Grandes Fortunas (ITSGF) is the solidarity wealth tax introduced by the central government in January 2023. The government created it precisely because regions like Andalusia, Madrid and Galicia were using bonifications to eliminate IP entirely. ITSGF is levied at national level, bypasses regional bonifications, and has been renewed every year since its introduction despite being called “temporary”. It catches net wealth above €3,000,000.
Who Pays IP as a British Non-Resident?
As a British non-resident, you are taxed only on your Spanish assets: property, Spanish bank accounts, shares in Spanish companies, Spanish-held investments. Your UK pension, UK savings account and UK home are not counted.
The standard allowance is €700,000 per person. There is no primary home exemption for non-residents (that €300,000 relief is for Spanish residents only).
Crucially, debt reduces the taxable base. If you have a Spanish mortgage, the outstanding balance is deducted from the property’s assessed value before tax is calculated.
Worked example: couple, €900,000 villa, no mortgage
Two British co-owners, no Spanish mortgage, property at €900,000 market value (though IP uses the higher of: market value, cadastral value, or the value declared at purchase).
- Each person’s share: €450,000
- Less each person’s allowance: €700,000
- Taxable base per person: €0
Result: no IP liability. Andalusia’s bonification not even needed.
Worked example: sole owner, €1,500,000 apartment, no mortgage
- Total Spanish assets: €1,500,000
- Less allowance: €700,000
- Taxable base: €800,000
Under the national IP rate table (which Andalusia replaces with its own), this would produce a tax bill of roughly €2,800 before bonification. With Andalusia’s 100% bonification: €0.
But this owner still has to file Form 714 if their gross Spanish assets exceed €2,000,000, even if the tax owed is zero, because the solidarity tax assessment is handled through the same form.
Who Pays ITSGF?
The solidarity tax targets net wealth over €3,000,000. As a British non-resident, only your Spanish assets count toward that threshold.
Rates:
| Net taxable wealth | ITSGF rate |
|---|---|
| €3,000,001 to €5,000,000 | 1.7% |
| €5,000,001 to €10,000,000 | 2.1% |
| Over €10,000,000 | 3.5% |
Worked example: high-value buyer, €4,200,000 portfolio
A British non-resident owns a €3,800,000 villa in Marbella and a €400,000 apartment in Estepona. No Spanish mortgage.
- Total Spanish assets: €4,200,000
- Less allowance: €700,000
- Taxable base: €3,500,000
- ITSGF at 1.7% on €3,500,000: €59,500 per year
That is not a small sum. And unlike the standard IP, Andalusia’s bonification does not apply to ITSGF.
Worked example: couple, €4,200,000 portfolio, joint ownership
Same portfolio as above, but split equally between two British co-owners.
- Each person’s Spanish assets: €2,100,000
- Less each person’s allowance: €700,000
- Each person’s taxable base: €1,400,000
- ITSGF threshold: €3,000,000
Neither person crosses the €3m threshold. ITSGF: €0.
This is why joint ownership matters for wealthy buyers. Splitting assets across two owners can keep each person under the threshold.
How Mortgage Debt Helps
A Spanish mortgage reduces your taxable base because the outstanding loan is treated as a liability deducted from your gross assets.
Example: You own a €2,500,000 villa with €800,000 outstanding on a Spanish mortgage.
- Gross value: €2,500,000
- Less mortgage: €800,000
- Net value for wealth tax: €1,700,000
- Less allowance: €700,000
- Taxable base: €1,000,000 (still under ITSGF threshold)
This does not mean you should take out a mortgage purely to avoid wealth tax. The interest cost will generally exceed the tax saving at rates below the threshold. But it is a legitimate planning point worth discussing with your Spanish tax adviser.
Does the UK-Spain Double Tax Treaty Help?
No. The UK-Spain double tax agreement covers income tax and capital gains tax. It does not include wealth tax. There is no mechanism to offset Spanish wealth tax against any UK liability. What you owe in Spain, you owe.
When and How to File
Wealth tax in Spain is filed annually, covering the previous calendar year. The key dates are:
| Step | Deadline |
|---|---|
| Form 714 filing opens | 1 April each year |
| Online submission deadline | 30 June each year |
| Direct debit payment (if owed) | 28 June each year |
Form 714 is submitted online via the Agencia Tributaria (Spain’s HMRC equivalent). A gestor or Spanish tax adviser typically handles this for €150-400 per year for non-residents with straightforward Spanish property ownership.
Who must file:
- Anyone whose gross Spanish assets exceed €2,000,000 (regardless of whether tax is due)
- Anyone whose net taxable base (after the €700,000 allowance) is positive and results in tax owed
If you own a single €800,000 property with no mortgage and Andalusia’s bonification reduces your bill to zero, you may still need to file because your gross assets are approaching the €2m informational threshold. Your gestor will confirm this based on current year rules.
Planning Points for British Buyers
Joint ownership from the start
For buyers spending over €1,500,000 in Spanish property, purchasing jointly between two people doubles the allowances and keeps each person further from the ITSGF threshold. This decision is best made before completion because rearranging ownership afterwards triggers stamp duty (ITP) again.
See our guide to completing your Spanish property purchase for context on how joint purchases work at the notary.
A Spanish mortgage for investment properties
If you are buying at the €2m-plus level, a partial mortgage keeps the net value below thresholds and retains liquidity. Get advice from a Spanish mortgage broker before assuming cash-only is always cleanest.
Avoid Spanish holding companies for most buyers
Some advisers suggest buying Spanish property through a Spanish SL (limited company). This removes the property from your personal wealth tax calculation, but adds corporation tax on rental income, higher ITP on eventual sale, and annual accounting costs of €1,500-3,000 per year. Unless you have multiple high-value properties or a complex structure, the compliance cost exceeds the tax saving.
Revisit your structure if values have risen sharply
Property prices on the Costa del Sol have risen 9-14% year-on-year in recent years (Colegio de Registradores Q1 2026). If you bought a €1.8m villa five years ago and it is now worth €2.6m, your wealth tax position has changed materially. Worth a conversation with your gestor at the next annual review.
FAQ
Does IP apply to my UK pension?
No. As a British non-resident, only your Spanish assets count for IP and ITSGF. Your UK state pension, personal pension, UK bank accounts and UK property are excluded.
What happens if I become a Spanish resident?
If you cross the 183-day threshold and become a Spanish tax resident, your worldwide assets count toward both IP and ITSGF. The €700,000 personal allowance still applies, plus a further €300,000 primary home exemption, but your total taxable base can increase dramatically once global assets are included.
Is the solidarity tax definitely permanent?
The Spanish government has extended ITSGF each year since its introduction in 2023. Its constitutionality has been challenged by regions including Madrid and Andalusia. The Constitutional Court has so far upheld it. Most advisers treat it as a permanent fixture until they hear otherwise.
Is there any way to reduce the assessed value for wealth tax?
IP uses the highest of three values: market value, cadastral value, or the value declared at the time of purchase. You cannot independently appoint a valuer to argue a lower figure. If you purchased at a price that is now significantly above current market value (rare on the Costa del Sol), your purchase price may actually be the lowest of the three, which helps.
I paid €550,000 for my apartment. Do I have to worry?
At €550,000, you have a comfortable buffer below the €700,000 non-resident allowance. Unless you hold significant other Spanish assets, you will have no IP liability and no ITSGF liability. You will not need to file Form 714 unless your gross Spanish assets exceed €2,000,000.
What to Do Now
If your total Spanish assets (property plus any Spanish bank balance or investments) are approaching €700,000, it is worth getting an annual wealth tax review as part of your normal year-end tax work with your gestor. The cost of a review is far lower than discovering a missed filing years later.
If you are looking at €1,500,000 or more of Spanish property and buying as a single owner, talk to a qualified Spanish abogado about joint ownership structure before you sign anything.
Always verify current allowances, rates and filing thresholds with a qualified Spanish tax adviser before filing. Spain’s wealth tax rules have changed almost every year since 2021 and are likely to continue evolving.
Ready to buy? Our team can connect you with English-speaking Spanish tax advisers and property lawyers who work with British buyers on the Costa del Sol every week. Tell us what you’re looking for and we’ll put the right people in your corner.
Related guides: Spanish Inheritance Tax for British Property Owners, Capital Gains Tax When Selling Your Spanish Property, Annual Running Costs of Owning Property in Spain, How to Buy Property in Spain as a UK Citizen
