Fixed costs that you will pay as a property owner in Spain

Becoming a property owner in Spain brings lots of advantages, but it also comes with certain financial commitments that we must not forget. Throughout this article, we will cover the fixes costs that you will have to pay as a property owner in Spain. Being prepared and understanding these costs can be the key to enjoying your property without any financial stress. Let’s take a look at them:

Mortgage

The mortgage is the highest fixed cost for most property owners, unless you have been able to buy your property without taking out a mortgage loan. Otherwise, the mortgage will be the main fixed cost for a long time (the average repayment term is around 24 years).

According to data from the Corporation of Registrars of Spain, the average monthly mortgage repayment in the last quarter of 2023 was €733.50. The amount you will have to pay will depend on the mortgage loan you have applied for. However, property experts recommend that the monthly mortgage repayment does not exceed 30% of the household’s total income.

Impuesto sobre Bienes Inmuebles (IBI) (Property Tax)

The Property Tax, commonly known as IBI, is a charge applied to all natural and legal persons that own property in Spain. It is calculated from the cadastral value of the property and is paid yearly.

The purpose of the IBI tax is to fund public services and municipal costs, such as maintaining roads, parks or street lighting. It is important to bear in mind that the tax amount will vary depending on the cadastral value of the property and the municipality. Each municipality applies a percentage that ranges between 0.4% and 1.3% of the cadastral value. This means that the municipality in which you purchase your property will set the percentage IBI that you will have to pay.

It is important to remember that paying the IBI tax is compulsory. If you don’t pay it, you may incur fines and surcharges. For that reason, we recommend including the IBI payment in your yearly budget. By taking it into account from the beginning, you will be able to plan your finances better and avoid problems in the future.

Utilities

Utilities are another cost that will form part of your daily life. These utilities include electricity, water and gas. Now, you would also add to this list an Internet connection, practically essential in nearly every home. These costs are usually paid monthly, although in some cases they can be bimonthly or quarterly. The amount will depend on various factors, mainly the level of consumption of each home and the contracted rates. For this reason, comparing the companies available is recommended in order to get the best offer.

Tasa de basuras (Rubbish tax)

Another tax to bear in mind is the rubbish tax. This charge is applied to property owners to cover the cost of collecting and managing waste.

The rubbish tax also varies from one municipality to another, so it is important to know the specific regulations of each town. In general, this tax is paid yearly and ranges between 60 and 100 euros, with an average price of approximately 90 euros per year. Some municipalities have figures above or below these amounts, so differences between towns can be noticeable. In some municipalities this service is financed by the proceeds of the IBI or water bill.

It is advisable to have a precise estimate of the rubbish tax before purchasing a property. This can be obtained by request information from the town hall or by asking neighbouring property owners. Additionally, it is important to bear in mind that the rubbish tax may change from one year to another.

Comunidad de vecinos (Residents’ association)

Unless you live in a chalet or detached house, the residents’ association is another fixed cost that you should include in your budget. This charge is generally paid monthly and is for the maintenance of the communal areas of your building or development. This includes, for example, looking after spaces like the swimming pool or garden, cleaning, electricity or managing the community. Even if you don’t use the communal spaces, this charge is compulsory for all property owners.

The amount each property owner must pay is normally calculated based on the usable area of each property. Therefore, the larger the surface area, the higher the amount owed. It is also important to bear in mind that unexpected situations can sometimes arise, such as necessary repairs or modifications, which property owners must fund via contributions or ‘derramas’. These contributions must be approved at a meeting and will involve an additional charge to the residents’ association charge.

House insurance

Having house insurance is essential to live with peace of mind and avoid any unexpected expenses in the future. Although house insurance is not compulsory, having it is highly recommend so you are protected from potential thefts, floods, etc. If you have applied for a mortgage, it is likely that the financial entity will require you to take out house insurance. The price of the insurance will depend on the cover and the insurance company chosen, as well as your property. According to the most recent data from the Organisation of Consumers and Users (OCU in Spanish), the average cost of a basic home insurance policy is around 250 euros per year for a property of 120 m². There are lots of insurance companies to choose from, so we recommend comparing them to choose the option that suits you best.

As we have seen, owning a property comes with a financial responsibility that you should consider in order to fully enjoy your home in Spain. Finding out what these costs are can help you to draw up a realistic budget. If you already know what your budget is and are clear about what you would like to buy, personalise your search and find the property that best suits your needs.