Buying a property in Spain is not just about looking at the advertised price, calculating the mortgage, and signing. There is a less exciting, but highly important part that you need to be clear about from the beginning: taxes and purchase expenses.
At The Property Agent, we see this often with buyers interested in properties on the Costa del Sol, especially in areas like Sotogrande, Estepona, Manilva, Casares, Benahavís, or La Alcaidesa. First comes the excitement of finding the right property; then the practical questions arise: “how much do I have to pay besides the price?”, “is buying a new build the same as a resale?”, “what happens if I buy off-plan?”, or “what taxes are paid in Andalusia?”.
And these are very reasonable questions, because in Spain, property purchase taxes change depending on the type of property, the autonomous community, and the specific situation of the transaction.
As a general rule, when buying a property in Spain, you must distinguish between two scenarios:
- New property or new build: normally you will pay VAT (IVA) + Stamp Duty (AJD).
- Resale property: normally you will pay Transfer Tax (ITP).
Note: In this article, the terms “second-hand property”, “reventa”, and “resale” are used synonymously to refer to the transfer of a used property by a private individual, which is subject to ITP.
The Tax Agency explains that purchasing a new property involves paying VAT, while the sale of properties by private individuals is subject to the Property Transfer Tax, known as ITP.
From there, there are nuances. And those nuances are precisely what can cause the final purchase cost to change quite a bit.
What taxes are paid when buying a property in Spain?
When you buy a property in Spain, the main taxes depend on whether the property is a new build or a resale.
The difference is important because you do not pay all taxes at the same time. In a new build purchase, the main tax is usually VAT (IVA). In a resale purchase, the main tax is usually ITP.
Additionally, in certain cases, the AJD applies, which is the Stamp Duty (Impuesto de Actos Jurídicos Documentados). This tax is usually particularly relevant in the purchase of new builds and in transactions formalized through a public deed.
In Andalusia, where many of the areas we work with at The Property Agent are located, the ITP and AJD have rates regulated by the autonomous community. The Junta de Andalucía indicates that, for onerous property transfers accrued from April 28, 2021, the general rate is 7%. For Stamp Duty (AJD), the general rate applicable from that same date is 1.2%.
Therefore, before crunching numbers, the first question shouldn’t be “how many taxes are paid?”, but rather:
Am I buying a new build, an off-plan property, or a resale property?
That answer changes almost everything.
The basic rule: new property, used property, or off-plan
To understand it simply:
| Property type | Main tax | Usual additional tax |
| New build | VAT (IVA) | AJD |
| Off-plan | VAT (IVA) | AJD |
| Resale | ITP | |
| Purchase from a developer | VAT (IVA) | AJD |
In an area like the Costa del Sol, this difference is very common because the buyer might be comparing, on the same day, a new build villa, an off-plan apartment, and a resale property ready to move into.
And this is where it’s wise to take your time. A property may seem more appealing based on price, location, or views, but the total acquisition cost can change when adding taxes, notary, registry, agency, and other associated expenses.
Taxes when buying a new property
If you buy a new property directly from a developer, you will typically have to pay VAT (IVA). For new residential properties, the general VAT is 10% of the purchase price. The Tax Agency also notes that certain cases of subsidized housing can be taxed at 4%, but for most standard residential transactions, the general rate is 10%.
This directly affects many new build and off-plan developments on the Costa del Sol. For example, if you buy a new property for €500,000, the general VAT would be:
€500,000 x 10% = €50,000
In other words, the buyer should anticipate €50,000 in VAT alone, on top of the property price.
In new build transactions, this amount shouldn’t come as a surprise at the end. The ideal approach is to be clear about it from the very beginning, especially when dealing with off-plan purchases with phased payments.
In my experience, one of the most common doubts arises when a buyer sees an attractive development and begins to organize their budget thinking only of the sale price. But the advertised price doesn’t always tell the whole story. To make a good decision, you have to look at the complete acquisition cost.
VAT: the main tax on new builds
VAT is paid to the seller, usually the developer, who then remits it to the Tax Office. For the buyer, the important thing is to know that VAT is added to the price of the property.
This calculation is basic, but highly useful. If you are looking for a villa, a luxury apartment, or an off-plan property in areas like Estepona, Sotogrande, or Benahavís, you must include VAT in your budget from day one.
AJD: the tax many people forget to calculate
In addition to VAT, purchasing a new build usually involves applying the AJD, the Stamp Duty. This tax is levied on certain notarial documents, such as public deeds, and is part of the Property Transfer and Stamp Duty Tax framework.
In Andalusia, the general AJD rate is 1.2% for taxable events accrued from April 28, 2021.
Example for a new property of €500,000 in Andalusia:
| Concept | Calculation | Amount |
| Property price | — | €500,000 |
| VAT (IVA) | 10% | €50,000 |
| AJD | 1.2% | €6,000 |
| Total with main taxes only | — | €556,000 |
Taxes when buying a resale property
When you buy a second-hand property, also called a resale, you usually don’t pay VAT, but rather ITP.
ITP is the Property Transfer Tax. As a general rule, it applies when the property is transferred between private individuals or when it is not a first delivery of a new property by the developer.
The Tax Agency summarizes this difference clearly: the sale of new properties is subject to VAT, while the sale of properties by private individuals is subject to ITP.
In Andalusia, the general ITP rate for real estate is currently 7%.
This means that if you buy a resale property in Andalusia for €500,000, the general calculation would be:
€500,000 x 7% = €35,000
That would be the general ITP, without taking into account possible reduced rates that only apply if specific requirements are met.
ITP: when is it paid and why does it change depending on the autonomous community?
One of the things that most confuses buyers is that the ITP is not the same throughout Spain. It is a tax ceded to the autonomous communities, so the rates can vary depending on where you buy.
Buying a property in Andalusia is not the same as doing it in Madrid, Catalonia, the Valencian Community, or the Balearic Islands. Therefore, any article that talks about “taxes in Spain” without specifying the autonomous community falls short.
In the case of The Property Agent, the natural focus is on Andalusia, especially the western Costa del Sol and surrounding areas. For many resale transactions in this area, the general ITP of 7% is a key benchmark.
What to keep in mind if you buy a Resale Property in Andalusia
If you buy a Second-Hand or Resale property in Andalusia, there are three important ideas:
The first: you will normally pay ITP, not VAT.
The second: the general rate is 7%, although there are reduced rates for certain cases involving primary residences, young people, people with disabilities, large families, or other specific situations. The Junta de Andalucía outlines reduced rates, for example, for transfers of a primary residence whose value does not exceed certain limits.
The third: you shouldn’t assume you are entitled to a reduced rate without reviewing it first.
This is especially important for international buyers. Often, those who buy on the Costa del Sol do so as a second home, investment, or holiday property. In those cases, some benefits linked to a primary residence may not apply.
Therefore, before signing a reservation contract or advancing with a transaction, it is advisable to review your specific case with a tax advisor or specialized lawyer.
How much extra money do you need besides the property price?
A guiding reference is to set aside approximately an additional 10% to 13% of the purchase price for taxes and expenses, although the final figure will depend on the property type, financing, and specific situation of the transaction.
In a new build purchase in Andalusia, just with VAT and AJD, you can already be looking at over 11% of the price. In a resale purchase, the general ITP of 7% leaves a little more margin, but you still have to add notary, registry, agency, and other costs.
This is one of the areas where it pays the most to be realistic. Buying a beautiful property on the Costa del Sol and discovering too late that you are short €30,000, €50,000, or €100,000 to close the transaction can turn a good opportunity into a problem.
At The Property Agent, we work precisely with buyers seeking clarity from the beginning. The website focuses on luxury properties, new builds, and off-plan homes in areas like Sotogrande, Manilva, Casares, Benahavís, and Estepona, so financial planning is an essential part of the process.
Quick calculation example for a €500,000 property
Let’s look at two very common scenarios.
Case 1: New property in Andalusia
| Concept | Approximate amount |
| Purchase price | €500,000 |
| VAT 10% | €50,000 |
| AJD 1.2% | €6,000 |
| Notary, registry, and other expenses | Variable |
| Indicative minimum total before other expenses | €556,000 |
Case 2: Resale property in Andalusia
| Concept | Approximate amount |
| Purchase price | €500,000 |
| ITP 7% | €35,000 |
| Notary, registry, and other expenses | Variable |
| Indicative minimum total before other expenses | €535,000 |
As you can see, the tax difference between buying a new build and a resale can be notable.
That does not mean one option is better than the other. A new build can offer energy efficiency, modern design, warranties, and less need for renovation. A resale may have a better location, immediate delivery, or more room for negotiation. The important thing is to compare with all the numbers on the table.
Notary, registry, agency, and other common expenses
Besides taxes, when buying a property in Spain you should anticipate other expenses:
- Notary: for the public deed of sale.
- Property Registry: to register the property in your name.
- Agency (Gestoría): especially common if there is a mortgage.
- Valuation (Tasación): if you need bank financing.
- Lawyer or tax advisor: highly recommended, especially for foreign buyers.
- Translations or Power of Attorney: in international transactions, there may be additional costs.
These amounts vary depending on the price of the property, the complexity of the transaction, and whether there is mortgage financing.
My advice is simple: before falling in love with a property, ask for a global cost estimate. Not just the price. Not just the taxes. Everything.
Taxes in Andalusia: a key point for buying on the Costa del Sol
If you are thinking of buying on the Costa del Sol, Andalusia is the autonomous community you should look at.
Here are two particularly important pieces of information:
- General ITP for real estate: 7%.
- General AJD: 1.2%.
Both rates are outlined by the Junta de Andalucía for taxable events accrued from April 28, 2021.
In practice, this means:
- If you buy a resale property in Andalusia, you should normally calculate a 7% ITP.
- If you buy a new build, you should normally calculate 10% VAT + 1.2% AJD.
These percentages are fundamental for buyers in Sotogrande, La Alcaidesa, Manilva, Casares, Estepona, or Benahavís.
And not just for Spanish buyers. Also for foreign buyers who are organizing their investment, opening a bank account, transferring funds, or researching financing.
My advice before buying a property in Spain
Buying a property in Spain involves more than just finding a property you like. It is also wise to thoroughly understand the costs and how the process works before moving forward. It is a major financial decision.
Therefore, my advice is clear: before deciding, calculate the total purchase cost.
Don’t stick solely to the property price. Ask what taxes apply, what expenses you should anticipate, and what the difference is between buying a new build, off-plan, or a resale.
At The Property Agent, our specialization in luxury properties, new builds, and off-plan homes on the Costa del Sol allows us to guide the buyer with a highly practical vision of the area and the type of property they are evaluating.
Knowing the area and understanding how each type of transaction works helps to avoid mistakes and make more informed decisions.
Rely on professionals who know the area and the process
Buying a property in Spain is much easier when you have professionals by your side who understand both the market and the process.
If you are looking to buy a property on the Costa del Sol, having a specialized agency like The Property Agent can make a huge difference right from the start. The goal is not just to find properties, but to help you understand the differences between areas, costs, and property types before making a decision.
In areas like Sotogrande, Estepona, Manilva, Casares, Benahavís, or La Alcaidesa, local knowledge is key. A property might look perfect on paper, but you should know what the area is really like, what services are nearby, how the market is evolving, and what costs you must anticipate before moving forward.
At The Property Agent, our support is focused precisely on that: helping you find a home that fits your lifestyle, your budget, and your goals, whether as a primary residence, a second home, or an investment on the Costa del Sol.
In addition to the support of a specialized real estate agent, it is also advisable to have a lawyer or tax advisor who can review the legal and tax aspects of the transaction. And if you need financing, a bank or mortgage advisor can help you understand the mortgage conditions.
Buying a property involves many decisions, from taxes and expenses to the area, property type, and legal process. That is why relying on good professionals and having clear information from the beginning can make the purchase much simpler and safer. In Spain, improvising is rarely a good idea; moving forward with sound criteria is.
