What Law 5/2025 means for living and investing in Spain

With Law 5/2025 (Ley 5/2025), the Valencian Community has implemented a series of significant tax changes that will directly impact property buyers, owners, and investors. These reforms will take effect in 2025 and will affect tax returns and property transactions in 2026 and beyond. For anyone considering living, investing, or buying a second home on the Costa Blanca, it's essential to understand these new rules correctly. At Global Spain, we closely monitor these developments and translate them into clear, practical insights for our clients.

Why this tax reform is important for property buyers

The real estate market in the Valencian Community remains particularly attractive thanks to its climate, quality of life, and international demand. With Law 5/2025, the regional government aims to:

• stimulate investments
• reduce the tax burden on wealth
• simplify family transfers
• making living in the region more attractive

This makes this reform particularly relevant for foreign buyers, families and investors in Spanish property.

Higher exemption for wealth tax (Impuesto sobre el Patrimonio)

One of the most striking changes is the doubling of the wealth tax exemption:

• the exemption threshold increases from 500,000 euros to 1,000,000 euros per person
• This measure applies from 31 December 2025 (declaration in 2026)
• for tax residents, the additional exemption for the main residence remains

For owners of second homes or investment properties, this means significant tax relief.

Inheritance and gift tax: expanding benefits

The Valencian Community was already known for its favorable inheritance tax, and this advantage is being further expanded:

• Transfers between partners, parents and children remain virtually tax-free
• brothers, sisters, uncles, aunts, nephews and nieces also receive additional reductions
• These benefits will be phased in from 2026

This makes family wealth planning through real estate considerably more interesting.

Lower transfer tax (ITP) and stamp duty (AJD)

There are also positive changes when purchasing existing real estate:

• the transfer tax will decrease from 10 percent to 9 percent
• a higher rate will continue to apply for homes above 1,000,000 euros
• stamp duty will decrease slightly, which is particularly relevant for mortgages and notarial deeds

For buyers on the Costa Blanca, this can make a noticeable difference to the total purchase cost.

Adjustments in income tax (IRPF)

In addition to real estate-related taxes, Law 5/2025 also includes reforms within the regional income tax:

• extra deductions for families with children
• benefits for childcare and education
• deductible medical expenses
• incentives for ecological and cultural investments

These measures strengthen the region's profile as an attractive place to live.

What does this mean in concrete terms for buyers and investors?

For Global Spain customers, this reform translates into:

• lower tax burden on real estate assets
• More favorable purchase costs - 9% transfer tax instead of 10% in the Valencian Community up to €1,000,000
• more flexibility in succession and asset planning
• a more attractive investment climate in the medium term

Overview of the most important changes

Conclusion: tax opportunities for those who invest wisely in Spain

Law 5/2025 clearly demonstrates that the Valencian Community is committed to an attractive tax policy for housing and investment. Lower taxes, higher exemptions, and greater transparency create additional opportunities in the real estate market.

At Global Spain, we guide our clients not only in finding the right home but also in understanding the tax and legal context. This way, you're not just investing in real estate in Spain, but also in a sustainable and carefree future.

Want to know what these tax changes mean for your specific situation? Feel free to contact Global Spain for personalized advice.