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Date Published: 13/03/2025

Rent to buy in Spain: What expenses and taxes can you expect?

This alternative way to purchase a home is becoming increasingly popular in Spain

Today in Spain, the average person spends an incredible 40% of their monthly budget on rent or mortgage payments. Although wages are going up, it’s happening at a snail’s pace and for so many people, getting a foot on the housing ladders seems like an impossible feat. As an alternative, young people in Spain and lower earners are increasingly turning to rent-to-buy as the only viable option.

Rent-to-buy, also known as rent-to-own, is a scheme where a portion of your monthly rent payments can be deducted from the total price of the home when you decide to buy it. It's an attractive option, but as with any purchase and sale process, there are expenses and taxes to consider.

Initial expenses

When entering into a rent-to-buy contract, there are several initial expenses to be aware of. These include:

A deposit, typically ranging from 5% to 10% of the sale price, which is deducted from the final purchase price
A rental deposit, which is returned at the end of the rental period provided the property is in good condition
Additional guarantees, such as a bank guarantee or extra deposits, which may be required by the landlord to secure rent payments.

Ongoing expenses

During the rental period, you'll need to consider the following expenses:

Monthly rent payments, as stipulated in the contract
Maintenance and repair costs, which may be your responsibility depending on the contract
Utilities, such as electricity, water, gas and internet
Taxes, including the Property Transfer Tax (ITP) and VAT, which may apply depending on the landlord's status and the autonomous community you live in

Exercising the purchase option

If and when you decide to buy the house you have been renting, you'll need to consider the following expenses:

The agreed-upon housing price, minus any rent payments that have been deducted
Notary fees, which typically range from 0.2% to 0.5% of the property price
Registration fees, which vary depending on the property price and can range from 0.1% to 0.25%
Agency fees, if you hire an agent to handle the purchase process, which can be around 300 euros

Taxes

The taxes associated with rent-to-buy in Spain can be complex, but here's a breakdown of what you can expect:

During the rental period, the landlord will need to declare rental income on their tax return
When exercising the purchase option, you'll need to pay the Property Transfer Tax (ITP) or VAT, which can range from 6% to 10% depending on the autonomous community and the type of property
The seller will also need to pay municipal capital gains tax and may be liable for personal income tax on the capital gain.

While rent-to-buy schemes are becoming increasingly common in Spain, they represent only a fraction of the property market and most people still choose the traditional buying and selling method. However, for low income families struggling to get a foot on the property ladder, it could be a good option to explore.

In other news: Installing solar panels increases the value of properties in Spain

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