Estepona Approves Property Tax Reduction to Attract Foreign Investment

The town hall of Estepona has approved a significant cut to property taxes in an effort to remain competitive and attractive to both residents and foreign property buyers. The new measure, passed during the latest pleno session, reduces the Impuesto sobre Bienes Inmuebles (IBI) — Spain’s annual property ownership tax — from 0.45% to 0.40%. This adjustment will apply starting in 2025.

This marks the sixth time the IBI rate has been reduced since José María García Urbano became mayor in 2011. At that time, the rate stood at 0.80%, meaning the latest decision has effectively halved the local property tax over the past decade. The town hall emphasized that despite these reductions, municipal finances remain healthy, with a debt-free budget and consistent investment in local infrastructure, green spaces, and public services.

The IBI cut is especially relevant for British nationals who continue to invest in property across the Costa del Sol. In 2024, British buyers accounted for one of the highest proportions of foreign home purchases in the area. Estepona’s comparatively lower tax burden now stands out even more sharply against other popular towns along the coast, including Marbella, which currently applies a higher IBI rate in most areas.

This move reflects a broader strategy by Estepona’s leadership to position the municipality as a long-term residence destination, not just a seasonal holiday market. Other initiatives have included investment in sustainable urban planning, pedestrianised zones, coastal pathway development, and high-end cultural facilities such as the Mirador del Carmen and the Estepona Hospital.

The reduction in IBI is expected to support continued demand, particularly among second-home buyers from the UK, Benelux, and Scandinavia, many of whom factor in annual tax liabilities when choosing where to purchase on the Costa del Sol.

With property values continuing to rise across Estepona — particularly in sought-after areas such as the New Golden Mile, Atalaya, and the town centre — the tax reduction may provide added incentive for buyers seeking both investment value and lifestyle appeal.