A purchase price is only the starting point. Whether you are choosing a contemporary villa in Benahavís, a beachfront flat in Estepona or an off-plan residence near Sotogrande, knowing what taxes apply when buying in Spain lets you judge the real cost from the start.
For buyers on the Costa del Sol, the main question is simple: is the property a resale, or is it being sold for the first time by a developer? The answer decides whether you pay Transfer Tax (ITP), or VAT (IVA) plus Stamp Duty (AJD). The detail matters, especially with off-plan stage payments, land or a non-resident seller.
Tax rules and rates change, and your own situation may differ. Treat this guide as a map and have your independent lawyer or tax adviser confirm the figures for your purchase.
What taxes apply when buying property in Spain?
Most residential purchases in Andalusia follow one of two routes. A resale property is normally subject to Impuesto sobre Transmisiones Patrimoniales, known as ITP or Transfer Tax. A new-build home bought directly from the developer is normally subject to IVA, Spain’s VAT, plus Actos Jurídicos Documentados, known as AJD or Stamp Duty.
These are purchase taxes. They are separate from professional fees and from the ongoing costs of owning a home. Your final budget should be based on the individual property and the structure of the deal, not on one headline percentage.
Resale homes: Andalusian Transfer Tax
When you buy a previously owned property from a private seller, ITP is usually the main tax. In Andalusia the general rate is currently 7% of the taxable value. This applies across much of the Costa del Sol, including Marbella, Estepona, Casares, Manilva, Benahavís and Sotogrande.
The taxable value is not always the agreed price. Spain can use the higher of the declared price and the official reference value of the property, where one exists. This matters for homes that look attractively priced, family transfers and properties that need renovation. Before you commit, your lawyer should check the reference value and tell you which tax base is being used.
The buyer generally pays ITP after completion through the regional tax process. A properly managed completion includes that filing and the registration of your title, so nothing is left open after you receive the keys.
New-build and off-plan homes: VAT and AJD
For a newly built home sold by a developer, buyers normally pay IVA at 10% rather than ITP. AJD is then payable on top. In Andalusia the standard AJD rate is currently 1.2%. A buyer should therefore allow around 11.2% for purchase taxes on the price, before professional and registration costs. I explain how AJD works in AJD in Andalusia, and why new builds are not VAT-exempt in VAT on new builds in Spain.
On off-plan purchases, VAT is commonly paid on each instalment, not only at completion. The developer should issue an invoice for each payment, and each payment should appear in the contract. AJD is normally dealt with when the public deed is signed before the notary.
A reduced VAT rate applies only in very specific cases, such as certain protected housing. It is not the norm in the prime second-home market. Ask for a full tax breakdown before you reserve, rather than relying on a marketing price. If you are comparing both routes, I put them side by side in new build versus resale in Spain.
A worked example on a €500,000 home
The figures below are for orientation, using the Andalusian rates above.
- New build: VAT at 10% is about €50,000 and AJD at 1.2% is about €6,000. That is roughly €56,000 in purchase taxes, around 11.2% of the price.
- Resale: ITP at 7% is €35,000, around 7% of the price.
The new-build tax bill is higher in percentage terms. That does not make a resale the better deal on its own, because the price, condition, warranties and running costs differ. It means you should compare homes on the all-in cost, not on the headline price.
Special cases that can change the taxes
The split between resale and new build covers most purchases, but not all. Plots of land, commercial units, properties held through a company or sold by an unusual seller can have a different VAT or Transfer Tax treatment. Buildable land sold by a business, for example, may carry VAT, while other land transactions fall under ITP.
Properties sold by banks, investment vehicles or developers deserve a closer look. A home that is not brand new does not automatically count as a standard resale for tax purposes. Your lawyer should establish the seller’s status, the property’s history and whether any VAT election or exemption applies before you sign.
For overseas buyers, nationality does not change the purchase tax rates. British, European and other international buyers pay under the same rules as Spanish residents. Residence matters more for the annual taxes of ownership and for a future sale.
Buying from a non-resident seller
One obligation surprises buyers of resale property. If the seller is not resident in Spain, the buyer generally has to retain 3% of the agreed price and pay it to the Spanish Tax Agency. It is not an extra tax on you. It is a payment on account of the seller’s possible capital gains tax.
The amount is deducted from what is paid to the seller at completion. Your legal team should handle the filing and keep the proof of payment. It is a good example of why an apparently simple resale needs careful coordination.
Costs that are not taxes but belong in the budget
Taxes get the attention, but the other costs also affect the cash you need. Notary and Land Registry fees are regulated and depend on the deed. Legal fees vary with the work: planning checks, mortgage coordination, or careful off-plan contract advice. I detail the non-tax costs in the fees buyers pay in Spain.
As a planning range for a cash purchase, allow around 10% to 13% for all taxes and standard costs on a resale in Andalusia, and around 12% to 14% for a typical new build. It is a range, not a quote. A high-value villa with a complex title, or a financed purchase, can fall outside it.
If you take a Spanish mortgage, the bank normally pays the AJD on the mortgage deed under the current rules. You may still pay valuation fees, bank charges and your own legal costs. See mortgages in Spain for non-residents for what to expect.
Do not confuse purchase taxes with annual ownership taxes
Once you own, annual charges begin. IBI is the local property tax, set from the cadastral value by the town hall. There are also rubbish charges and community fees. Non-resident owners can face Spanish income tax even if the home is only used personally, and other taxes if they rent it out or sell. I explain these in property taxes in Spain for foreign owners and the running costs in the cost of owning property in Spain. If you sell later, the municipal plusvalía is covered in plusvalía explained.
How to plan your purchase with clarity
Before you make an offer, ask for the price to be separated from furniture, parking, storage and optional extras. Confirm whether the seller is a private individual or a developer, request the tax estimate and have an independent lawyer check the reference value, title, licence and community position. I explain how to choose one in how to choose a Spanish lawyer.
For off-plan, read the payment calendar as carefully as the floor plan. Your stage payments should be protected by the legal guarantees and fully invoiced for VAT. I show how the protection works in how your deposit is protected when you buy off-plan.
Want a full cost breakdown before you reserve?
I work with new-build and off-plan homes on the Costa del Sol, so I can give you the all-in cost of a specific development before you reserve, not just the price in the brochure. For the tax advice itself, I will connect you with an independent lawyer or tax adviser. Get in touch and tell me which homes you are comparing.
