Tax & Legal
What Taxes Will I Pay When Buying and Owning Property in Europe?
When buying property in Europe, you need to budget for more than the purchase price. There may be taxes when you buy, annual ownership taxes, tax on rental income and capital gains tax when you sell.
When buying property in Europe, you need to budget for more than the purchase price. There may be taxes when you buy, annual ownership taxes, tax on rental income and capital gains tax when you sell.
As an American, you also need to consider US tax and reporting obligations. Paying tax in Europe does not automatically settle your position with the IRS.
The amount you pay depends on the country, location, property type, ownership structure and your tax residence. A holiday apartment, a permanent home and a furnished rental can produce different results—even at the same purchase price.
This guide covers Portugal, Spain, Italy, Greece and France, using information checked in November 2026.
Understand the tax base before comparing rates
A headline percentage tells you little unless you know what it applies to.
European property taxes may use:
- The purchase price.
- An official reference or assessed value.
- A cadastral value calculated under local rules.
- Rental income after specified deductions.
- A capital gain calculated under that country’s legislation.
A cadastral value is an administrative valuation used for tax purposes. It may differ substantially from market value.
Also separate taxes from professional expenses. Notary charges, legal fees, registration costs, surveys and estate-agent commissions are not all taxes, although they still belong in your purchase budget.
Ask for a written completion estimate showing each item separately.
Portugal: purchase taxes depend increasingly on your residence status
IMT and stamp duty when you buy
Portugal charges property transfer tax, known as IMT, alongside purchase stamp duty.
IMT normally depends on the property’s classification, intended use and taxable value. The tax base is generally the higher of the purchase price and the property’s official taxable value, known as VPT.
A significant 2026 change affects non-resident buyers. Legislation introduced a 7.5% IMT rate for non-resident acquisitions of residential property, with specified exceptions and adjustment procedures. These include becoming Portuguese tax resident within two years or meeting qualifying residential-letting conditions.
Consequently, a general estimate based only on Portugal’s progressive residential tables may be inappropriate for an American buying before relocating.
For a €400,000 taxable purchase subject to the 7.5% rule, IMT alone would be €30,000. Purchase stamp duty and professional costs would be additional.
Have your adviser establish which rules apply on the completion date and whether any subsequent adjustment requires a claim.
Annual IMI and possible AIMI
Portugal’s annual municipal property tax, IMI, generally uses VPT rather than purchase price.
For urban properties, the ordinary municipal rate is generally 0.3%–0.45%, with limited exceptional provisions. The 0.8% rate commonly quoted alongside it relates to rural property, rather than being the ordinary upper rate for urban homes.
Higher-value residential holdings may also attract AIMI, an additional property tax. For individuals, the framework generally includes a €600,000 deduction from the relevant aggregate taxable value, potentially €1.2 million for qualifying couples electing joint treatment.
Ask for both an IMI estimate and an AIMI assessment where relevant.
Rental income and sale proceeds
Ordinary residential rental income generally has a 25% autonomous tax rate, with potential reductions for qualifying longer-term contracts and other applicable reliefs. Short-term accommodation should be assessed separately rather than assumed to receive the same treatment.
Portugal also allows specified property expenses against rental income, while excluding others, including certain financing, depreciation and furnishing costs.
On sale, it is incorrect to assume Portuguese residents simply pay a flat 28% on property gains. The ordinary individual property-gain framework generally brings 50% of the relevant gain into account, subject to applicable rules and exceptions. Your residence status, other income and any qualifying relief need a separate calculation.
Spain: region and tax residence make a substantial difference
Resale property versus a new home
Resale homes generally attract regional transfer tax, ITP. Qualifying first deliveries of new homes by developers generally attract VAT instead.
The general residential VAT rate is 10%, although exceptions exist. New-home purchases can also involve document tax, AJD, so VAT should not be treated as the entire purchase-tax budget.
ITP varies by autonomous community, property value and eligibility for relief.
For example, Valencia’s general rate changed from 10% to 9% from June 1, 2026, while retaining an 11% rate where the relevant property value exceeds €1 million.
A €400,000 purchase subject to the standard 9% rate would therefore produce €36,000 of ITP, assuming €400,000 is the applicable taxable base and no relief applies.
The taxable value may exceed your agreed price
For Spanish transfer tax, the cadastral reference value can determine the base. Where the declared value or agreed price is higher, the higher figure applies under the statutory rules.
Ask your lawyer to check the reference value before making a binding commitment. Negotiating a lower price does not necessarily reduce tax proportionately.
Annual IBI and tax on personal use
IBI is Spain’s municipal property tax. Obtain the latest bill and confirm the assessed value and applicable local rate.
Non-resident individuals may also owe income tax on deemed income from an urban property kept for personal use or left empty. This is separate from IBI and can apply even without rental receipts.
The deemed-income base generally uses a specified percentage of cadastral value, adjusted for relevant ownership and rental periods. The published general rates are 19% for qualifying EU/EEA residents and 24% for other taxpayers.
For Americans, the relevant distinction is tax residence, not simply citizenship. Becoming Spanish tax resident changes the framework.
Rental income and selling as a non-resident
Do not apply resident income-tax bands automatically to a non-resident sale.
Spain’s tax authority states that non-resident property gains are taxed at 19%. The buyer must generally withhold 3% of the agreed sale consideration and pay it to the tax authority as an advance against the seller’s liability.
The withholding is not necessarily the final tax. A refund may be available where it exceeds the liability.
Before buying, request separate estimates for personal-use ownership, letting and a future sale. Higher-value purchasers should also ask whether wealth-related taxes affect their position.
Italy: first-home relief and cadastral calculations need careful checking
Registration tax on qualifying purchases
For purchases subject to proportional registration tax, the familiar rates are 2% with qualifying first-home relief and 9% without it. However, “this will be my main home” is not, by itself, a complete eligibility assessment.
Seller status also matters. A VAT-taxable purchase follows different rules from a purchase taxed through proportional registration tax.
Italy’s prezzo-valore system can allow qualifying residential transactions to use a cadastral calculation rather than the purchase price. The buyer must request its application in the purchase deed; it does not apply to VAT-taxable sales.
Have the notary calculate the actual liability and confirm relief eligibility before relying on a percentage.
Annual IMU
Italy’s IMU generally applies to second homes and other taxable properties. Qualifying principal residences generally receive different treatment, with exceptions for certain property categories.
The ordinary base rate for properties outside the principal-residence exemption is 0.86%, with municipal variation within statutory limits. That percentage applies to the relevant tax base, not automatically to purchase price.
Ask for the current municipal calculation and any separate local charges, including waste collection.
Rental tax and capital gains
Italy’s cedolare secca is an optional regime subject to eligibility and the rental category. It should not be described as a universal 21% tax.
For qualifying non-business short lets, 21% applies to one selected property and 26% to additional properties within that regime. Platform withholding may be an advance payment rather than the final liability.
For sales, the ordinary five-year rule has important exceptions. In particular, certain properties benefiting from Superbonus works can fall within a separate ten-year capital-gains provision.
Check the renovation history before assuming a sale after five years will be exempt.
Greece: transfer tax, ENFIA and progressive rental taxation
Purchase transfer tax
Greece’s ordinary property transfer tax is 3% of taxable value, with a municipal levy equal to 3% of that tax. The combined effect is 3.09%.
If the applicable taxable value is €400,000, that produces €12,360 of transfer tax before professional expenses.
Confirm the taxable value and whether the transaction falls under transfer tax or another applicable treatment. Do not assume a new-build transaction necessarily follows the same rules as a resale.
Annual ENFIA
Greece’s annual property tax is ENFIA.
Its calculation considers characteristics such as location, area, use, age and floor, with further provisions linked to an individual’s total property value. A generic annual estimate cannot replace a property-specific assessment.
Request the latest assessment and ask what could change under your ownership.
Rental income and capital gains
From tax year 2026, Greece’s individual property-income bands are:
- 15% up to €12,000.
- 25% from €12,001 to €24,000.
- 35% from €24,000.01 to €36,000.
- 45% above €36,000.
These are progressive bands, rather than a single rate applied to all income. Business classification and additional services can change the treatment.
The ordinary individual property capital-gains tax is suspended through December 31, 2026. That is a dated suspension, not a permanent exemption or a promise about future sales.
France: distinguish acquisition charges, annual taxes and wealth tax
Taxes when buying
For existing property, French transfer-related taxes vary by department.
The former widely quoted figure of approximately 5.8% is no longer universal. Departments can apply an increased rate within the temporary framework running from April 2025 to March 2028, bringing the published maximum combined transfer-tax figure to approximately 6.32%.
The amount commonly called “notaire’s fees” includes taxes, regulated remuneration and other expenses. It is not simply the notary’s professional charge.
Qualifying new-property transactions have a different VAT and reduced transfer-tax structure. Obtain a breakdown showing what the advertised price includes.
Taxe foncière and taxe d’habitation
Budget for taxe foncière, and check whether taxe d’habitation applies to your intended use.
Taxe d’habitation was abolished for main residences, but remains relevant to second homes. Certain municipalities can impose a second-home surcharge.
Ask for recent bills rather than relying on a national “typical home” estimate.
Higher-value property and selling
France’s property wealth tax, IFI, can become relevant where household net taxable property wealth exceeds €1.3 million. For non-residents, French property interests are central to the assessment, including certain indirectly held interests.
On a taxable non-resident sale, France generally applies 19% capital-gains income tax, with social charges and possible further provisions. Exemptions, ownership-period allowances and social-security affiliation can materially change the result.
Rental treatment also depends on whether the property is furnished or unfurnished and the applicable regime. Request a calculation based on your actual letting plan.
Your US obligations continue alongside local taxes
Foreign income remains relevant to your US return
US citizens generally remain subject to US tax rules on worldwide income, even while living abroad. Filing obligations depend on the applicable requirements; citizenship does not mean every person must file regardless of income.
European rental income and taxable sale gains must be assessed under US rules as well as local law.
The two countries may calculate income differently. Expenses, depreciation, exemptions and exchange rates can produce different taxable results.
Foreign tax credits do not guarantee zero additional US tax
A foreign tax credit can reduce double taxation where the requirements are met. However, only qualifying foreign taxes are creditable, and limitations apply.
Purchase taxes, annual property taxes and foreign income taxes are not interchangeable for this purpose. Do not assume every euro paid abroad becomes a dollar-for-dollar US income-tax credit.
Have the local adviser and US CPA coordinate the treatment, timing and documentation.
FBAR concerns accounts, not the property itself
An FBAR is generally required where a US person’s reportable foreign financial accounts exceed $10,000 in aggregate at any point during the calendar year.
The threshold concerns combined accounts, not $10,000 in each account. Transferring purchase funds through a European account can therefore create a filing obligation even if the money stays there briefly.
Directly owned foreign real estate is not itself reportable on FBAR or Form 8938. Foreign accounts and interests in entities holding property can create separate reporting requirements.
What to establish before making an offer
Ask for a written assessment covering your proposed purchase, intended use and ownership structure.
It should identify:
- Purchase taxes and the correct taxable value.
- Eligibility conditions for reliefs.
- Annual property and applicable wealth taxes.
- Tax consequences of personal use and rental activity.
- Local and US treatment of a future sale.
- Filing deadlines and record-keeping requirements.
Keep the purchase deed, completion statement, tax receipts, improvement invoices and rental records. These documents may matter years later when calculating a gain.
Before putting the property into a company, trust or other structure, obtain advice in both countries. A structure that appears convenient locally can add US reporting complexity.
Budget for the full period of ownership
The most useful question is how much the property will cost to buy, hold, use, rent and eventually sell under your circumstances.
A lower purchase-tax rate can coexist with higher annual costs. A local sale exemption may leave a US liability. Becoming tax resident before or after completion can also change the calculation.
If you are planning a European property purchase, discuss your purchase and relocation plans with Vantage Point Europe. Identifying the independent local and US tax advice you need before committing can help you build a realistic ownership budget.