Mortgage in Spain for French buyers

The Spain-France Double Tax Convention (signed in 1995, published in Spain’s BOE on 12 June 1997) governs how income, capital gains and wealth are taxed between both countries.

If you remain French tax resident (less than 183 days/year in Spain):

• IRNR (Spanish non-resident tax): 19% on imputed income (1.1% of the cadastral value if it was revised in the previous 10 years, 2% otherwise) for every year the home is not rented (Non-Residents’ Income Tax Law arts. 24.5 and 25.1; IRPF Law art. 85)
• If rented: 19% on net rental income; as an EU resident you can deduct expenses such as mortgage interest, IBI, community fees, insurance and repairs (art. 24.6)
• Salary for work done in France: taxed in France; pensions follow the treaty rule for each type of pension
• Capital gains on sale: Spain taxes 19% and the buyer withholds 3% of the price on account (art. 25.2); France relieves double taxation under the treaty
• EU Succession Regulation 650/2012: you can choose French law, the law of your nationality, for your whole succession, including the Spanish property (art. 22)

If you become Spanish tax resident (>183 days/year):

• Worldwide income subject to Spanish IRPF, on the State scale plus your region’s scale
• French pension reportable in Spain with treaty relief
• Modelo 720 required if your assets abroad exceed €50k in any of its categories
• Special regime for people moving to Spain for work ("Beckham Law", art. 93 of the IRPF Law): 24% on Spanish-source income other than savings up to €600,000 (47% above), for the year you move and the next five, if you were not resident in the previous five years

Action point: coordinate with a French notaire and a Spanish gestor on succession planning. Without a choice, the law of your habitual residence at death applies (art. 21 of Regulation 650/2012): French law while you live in France, Spanish law if you later move to Spain. Choosing French law in your will (art. 22) keeps it either way.

If you are French tax resident and your net taxable real estate exceeds €1.3M on 1 January, you are subject to IFI in France. French tax residents declare real estate held in France and abroad, so your Spanish property is included in the IFI base (service-public.fr).

How it works:

• Property value: market value (valeur vénale) at 1 January of the tax year
• Spanish mortgage: debts existing on 1 January for buying the property are deductible, if you can document them
• Spain has its own wealth tax (Impuesto sobre el Patrimonio) on non-residents’ Spanish assets, and each region sets its own allowances
• Treaty relief: the Spain-France convention also covers taxes on wealth; ask a French adviser how Spanish wealth tax is relieved against IFI
• IFI rate: progressive scale set in the French Tax Code; check the current barème on impots.gouv.fr

Practical tip: if you are buying near the IFI threshold, consider whether the Spanish mortgage size brings your global property value (net of debt) below €1.3M. Holding the Spanish property via an SCI (Société Civile Immobilière) is sometimes used but adds complexity — discuss with a French tax advisor before signing.