Tax & Legal
What Taxes Will I Pay When Buying and Owning Property in Europe?
Taxes are the most under-researched part of European property ownership for American buyers. There are taxes to buy, taxes to own, taxes on rental income, and taxes when you sell — plus your ongoing US tax obligations as an American living abroad.
American buyers are often surprised to discover how many different taxes apply to European property. Here is the complete picture, covering both the local taxes and your ongoing US obligations.
Taxes at purchase
Every country charges transaction taxes when you buy property. These are typically a percentage of the purchase price:
Portugal: IMT (property transfer tax) on a sliding scale from 0% to 7.5%, plus 0.8% stamp duty. On a €400,000 purchase, expect roughly €22,000–28,000 in tax.
Spain: ITP (property transfer tax) of 6–10% depending on the region, or 10% VAT on new builds. On a €400,000 purchase in Valencia: ~€40,000.
Italy: Registration tax of 2% for primary residence or 9% for second homes, plus fixed cadastral and mortgage taxes. Rates are calculated on the cadastral value (typically lower than market price), which significantly reduces the actual bill.
Greece: Property transfer tax of 3.09% on the contract price. Notary fees, lawyer fees, and agent commission add another 4–6%.
France: Droits de mutation of approximately 5.80% for older properties. New builds are subject to VAT (20%) instead.
Annual ownership taxes
All five countries have annual property taxes similar to US property taxes:
Portugal: IMI (Imposto Municipal sobre Imóveis) — 0.3% to 0.8% of the property's tax value (usually lower than market value).
Spain: IBI (Impuesto sobre Bienes Inmuebles) — 0.4% to 1.1% of cadastral value.
Italy: IMU (Imposta Municipale Unica) — 0.86% to 1.06% for second homes.
Greece: ENFIA (property tax) — varies by size, location, and value. Typically €300–2,000/year for residential properties.
France: Taxe foncière and taxe d'habitation — typically €1,000–3,000/year for a typical property.
Rental income taxes
If you rent your property (including Airbnb), rental income is taxable in the country where the property is located — and also reportable on your US tax return (though tax treaty credits prevent double taxation).
Rates vary: Portugal taxes rental income at a flat 28% (reducible with deductions); Spain at 19% for EU residents, 24% for non-residents; Italy at 21% (cedolare secca flat rate option); Greece at progressive rates starting at 15%.
Capital gains taxes on sale
When you sell, capital gains are taxed locally and must also be reported in the US:
Portugal: 50% of the gain is included in taxable income for non-residents; residents pay a flat 28%.
Spain: 19–26% depending on the gain amount.
Italy: 26% on gains from properties held less than 5 years; exempt after 5 years (primary residence rules apply).
Greece: Capital gains tax suspended until further notice (currently 0% for individuals).
Your US obligations
As a US citizen, you must file US tax returns regardless of where you live. You must report all foreign income (rental, capital gains) and all foreign financial accounts above $10,000. The IRS allows foreign tax credits which typically eliminate double taxation, but the reporting requirements are real and require a specialist CPA.
We work with cross-border CPAs who handle both the US and local tax filings.