Over the past few years, Valencia has emerged as one of the most attractive cities in Spain for real estate investors. Foreign retirees and young professionals are increasingly choosing the city for a more relaxed lifestyle.
With its Mediterranean climate, accessible beaches, lively neighbourhoods and still-reasonable prices, Valencia welcomes new property buyers every year.
But while the Valencian real estate market attracts attention thanks to its affordability, it is important to be aware of the local tax system, which every buyer or investor should understand before getting started.
In Spain, property taxation varies from one region and city to another.
Overall, annual property-related taxes such as the IBI (property tax), municipal capital gains tax (plusvalía) or waste collection fees are relatively low. They have little impact on rental profitability, which makes owning a property in Spain simpler and more advantageous than in many other European countries.
In recent years, Valencia has become one of Spain’s top destinations for real estate investment, combining quality of life, sunny weather and still-affordable property opportunities.
1. Property tax (IBI): the main tax for owners
The property tax, known as IBI (Impuesto sobre Bienes Inmuebles), is the most important tax paid by real estate owners. It applies to main homes, secondary residences, and rental properties.
The amount is based on the cadastral value of the property, which is set by the municipality.
(The cadastral value is not the same as the market value. It is an administrative value used only as a basis for tax calculation.)
Key points:
The tax rate in Valencia ranges from 0.4% to 1.1% of the cadastral value.
A standard apartment in a central neighbourhood typically pays €100 to €500 per year in IBI.
Properties in tourist areas (such as El Cabanyal or Ruzafa) do not necessarily have higher taxes — sometimes the opposite.
2. Non-residents: be aware of additional taxes
IRNR: the Spanish income tax for non-residents
If you own a property in Spain but are not a tax resident, you are subject to IRNR (Non-Resident Income Tax). This applies whether the property is rented out or not.
3. If the property is rented
The taxable amount corresponds to the rental income received.
For property owners residing in the EU or EEA, certain expenses (repairs, local taxes, etc.) may be deducted. The tax rate is 19%.
For non-residents outside the EU/EEA, the tax rate is 24%, with no deductions allowed.
4. If the property is not rented
Even without rental income, Spain applies a deemed income tax based on the cadastral value of the property.
The IRNR is calculated on this theoretical income so that every owner contributes, even if the property is vacant.
5. Declaration and payment
IRNR must be declared quarterly if the property is rented, or annually if it is not. Payment is made directly to the Spanish tax administration.
Compliance is essential to avoid fines or surcharges.
6. Impact on profitability
For most residential investments, IRNR remains a moderate cost.
It should be included in profitability calculations, but it does not prevent real estate investment in Valencia from being attractive — especially given current rental demand and prices.
Conclusion
Buying a property in Valencia means investing in a city that is cultural, sunny and economically dynamic.
But to ensure your purchase is profitable, it is essential to understand local taxes and include them in your financial plan.
Whether you are a foreign investor, a retiree or a first-time buyer, knowing how taxation works in Valencia will help you avoid surprises and fully benefit from the growing potential of this Mediterranean city.