“COSTA DEL SOL VS. MALLORCA: WHICH OFFERS BETTER PROPERTY VALUE?”

“Costa del Sol vs. Mallorca: Which Offers Better Property Value?”

“Costa del Sol vs. Mallorca: Which Offers Better Property Value?”

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Costa Blanca's Tax Benefits for Foreign Property Owners: Things to Know

Purchasing property abroad is a desire for all, and Costa Blanca, Spain's iconic white coast, continues to attract foreign buyers having its beautiful beaches, year-round sunshine, and relaxed lifestyle. But beyond the scenic views and mild climate, Costa Blanca offers real tax advantages for international property owners. Understanding these tax benefits may make a substantial difference in your return on investment and overall cost of residing in Spain.

Whether you're purchasing a vacation home, planning for retirement, or trying to generate rental income, here's things you need to know about the tax benefits of owning property in Costa Blanca.Estate Agent Los Alcazares



Why Costa Blanca Is a Foreign Investor's Favorite


Stretching along Spain's southeastern coastline in the province of Alicante, Costa Blanca offers a mix of bustling cities, charming villages, and tranquil beach resorts. Towns like Alicante, Benidorm, Torrevieja, and Jávea are especially favored by British, Dutch, and Scandinavian property buyers.

Besides lifestyle perks, Spain's tax regime for non-resident property owners is surprisingly favorable—particularly in the Valencia region, where Costa Blanca is located.



Key Tax Benefits for Foreign Property Owners in Costa Blanca


1. Double Taxation Agreements (DTAs):
Spain has tax treaties with over 90 countries, such as the UK, Germany, and the U.S., to avoid double taxation.This implies you won't pay tax twice in your rental income or capital gains—once in Spain and once in your home country.

2. Low Property Tax (IBI):
The annual Impuesto sobre Bienes Inmuebles (IBI) is Costa Blanca's equivalent of a house tax. It's relatively low in comparison to other EU countries and is on the basis of the cadastral value, not industry price, of the property.

3. No Wealth Tax for Most Owners:
Although Spain reinstated a wealth tax, many foreign buyers in Costa Blanca are exempt due to high exemption thresholds (€700,000 per person, plus €300,000 for your primary residence). For a lot of mid-range property owners, this tax simply doesn't apply.

4. Inheritance and Gift Tax Reductions:
The Valencia regional government offers significant reductions on inheritance and gift tax for close family members. Oftentimes, spouses and children pay little to no tax when inheriting property.

5. Tax Deductions on Rental Income:
Non-resident EU/EEA citizens who rent out their Costa Blanca property can deduct allowable expenses, such as for instance repairs, maintenance, mortgage interest, and insurance. This significantly lowers the effective tax rate on rental income.



Tax Residency vs. Non-Residency: Know the Difference



  • Non-residents (spending fewer than 183 days/year in Spain) pay a flat tax rate on rental income—currently 19% for EU/EEA residents, and 24% for non-EU citizens (like U.S. and UK nationals post-Brexit).

  • Residents, on one other hand, declare worldwide income but can benefit from progressive tax rates and broader deductions.


If you're planning to keep long-term, learning to be a tax resident might offer additional advantages, particularly when you're retired or earning locally.



Tips to Maximize Tax Efficiency



  • Assist a local tax advisor who understands regional and national laws.

  • Declare your property income and expenses accurately to take advantage of deductions.

  • Consider joint ownership with a spouse to take advantage of dual tax allowances.

  • Stay updated on post-Brexit tax implications if you're a UK citizen.





Final Thoughts


Costa Blanca is more than simply a lovely place to buy another home—additionally it is a good financial move once you understand the tax advantages offered to foreign property owners.With low property taxes, tax treaties, and potential deductions, owning a house here can be both a lifestyle upgrade and a tax-savvy investment.

Whether you're buying for holidays, retirement, or rental income, Costa Blanca offers a solid foundation for enjoying the Spanish lifestyle while maintaining your taxes in check.

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