Foreigners Have to Pay 100% Tax for Buying Homes in Spain

In a bid to make housing more affordable for his people, Spain’s Prime Minister Pedro Sánchez on Monday said that foreigners who purchase a second home in the sun and owners to rent to tourists should pay 100% tax of the property value to ensure they contribute to the economy like a business.

Housing has been a pressing issue for Spaniards and 35% feel that they find it difficult to access affordable housing in large cities where prices per sq. m. can exceed $7,174. This is almost three times the EU average of 13%.

According to media reports, it is estimated that between 60,000 and 90,000 foreigners buy property in Spain every year, usually second homes used for holidays or rental purposes. “It’s unfair that individuals with multiple properties listed for short-term stays pay less tax than hotel operators or regular workers,” Sanchez said.

Government figures showed that non-EU residents purchased as many as 27,000 houses in 2024, and it is estimated that at least three million new homes need to be built over the next 15 years to house a population whose growth is driven in great part by immigration.

Addressing an economic forum in Madrid on Monday, the Prime Minister also said he wanted to restrict the purchase of residential property by non-resident foreigners to ensure that Spain is an affordable place to buy a place in the sun.

He also announced that the government will transfer of two million sq. m. of land to a newly-created public company to construct “thousands and thousands” of affordable social housing units. Social housing makes up only 2.5% of Spain’s total stock, whereas in countries like France and the Netherlands, it is 14% and 34% respectively, Sanchez said.

The issue of housing shortage and steep hike in rentals have resulted in widespread public discontent, as the locals have been protesting in several regions.

Spain, historically a nation of homeowners, has seen an increasing shift towards renting, placing financial strain on households. The Bank of Spain has also urged government intervention, warning that the high percentage of income spent on rent compared to other EU countries could lead to significant economic and social repercussions, the reports said.

Tax on Tourist Apartments

As for those who buy house to rent, Sánchez, along with several of his Cabinet colleagues, announced plans to tax tourist apartments as businesses and subject them to taxation comparable to other economic activities. The new tariff would help prioritise the availability of housing for residents.

The new package also includes a tax exemption of up to 100% for owners who make their currently empty homes available for affordable rent. Sánchez’s government has long targeted tourist apartments, particularly in Madrid, Barcelona, Malaga and Valencia, blaming them for limiting affordable housing for locals.

All these proposals must be ratified by Spain’s Parliament, where Sánchez faces an uphill task of securing a majority. If approved, the measures could signal a transformative shift in Spain’s housing policies, aiming to balance tourism, investment, and residents’ rights to affordable housing.