The purchase price is only part of the story. If you are asking what taxes apply when buying property in Spain, especially on the Costa del Sol, the real answer depends on what you buy, whether it is a resale or a new build, and how the purchase is structured.
For many UK and international buyers, the surprise is not that taxes exist – it is how easily they can shift the total budget by several percentage points. A well-chosen property can still be an excellent lifestyle or investment decision, but you need clarity from the outset so there are no awkward calculations just before completion.
In Spain, the main tax you pay when buying property is usually one of two options. If you are buying a resale property, you normally pay Transfer Tax, known as ITP. If you are buying a brand-new property directly from a developer, you usually pay VAT, known in Spain as IVA, plus Stamp Duty, known as AJD.
That distinction matters because you do not generally pay all of these purchase taxes together. In most cases, it is either ITP on a resale, or IVA and AJD on a new build.
On the Costa del Sol, in Andalusia, the standard ITP rate for resale property is currently 7%. For new-build homes, IVA is usually 10% on residential property, while AJD is commonly 1.2% in Andalusia. Commercial property can follow different VAT rules, so investors buying offices, retail units or mixed-use assets should treat the numbers with extra care.
If the property has already had a previous owner and you are not buying it directly from a developer for first occupation, it will usually fall into the resale category. In that case, the key tax is ITP.
ITP is calculated on the purchase value accepted by the tax authorities, not simply the figure you would prefer to declare. That is an important detail for overseas buyers, because Spain takes declared values seriously. If the tax office believes the stated price is below market value, it can challenge the amount and ask for additional tax.
For a buyer of a villa, townhouse or flat on the Costa del Sol, this means your budget should include the purchase price plus 7% ITP, alongside legal fees, Land Registry costs and notary charges. While those extra costs are not taxes, they are part of the same financial picture and should be planned together.
There can be exceptions in specific cases, including certain protected housing arrangements or unusual transaction structures, but most lifestyle buyers purchasing a standard resale home in Andalusia will be working with ITP.
If you are purchasing a newly built property from a developer, the tax treatment is different. Instead of ITP, you usually pay IVA at 10% for residential property and AJD at 1.2% in Andalusia.
This often catches buyers who assume a new build is automatically simpler or cheaper from a tax perspective. New developments can offer strong advantages – modern design, energy efficiency, warranties and attractive rental appeal – but the upfront tax burden is often higher than for a resale purchase.
For example, on a new-build home priced at 500,000 euros, IVA alone would usually be 50,000 euros, with AJD adding a further 6,000 euros. That is before legal and registration costs. The appeal of a turnkey property may still be strong, particularly for buyers who want minimal renovation work, but the tax calculation should be part of the decision rather than an afterthought.
Parking spaces and storage rooms purchased with the home may also have specific VAT treatment depending on how many are included and how they are described in the transaction documents. This is one of those areas where details matter more than buyers expect.
If you are buying for investment, especially through a company or for commercial use, the answer to what taxes apply when buying can become more nuanced. The standard residential rules are still a useful starting point, but they may not tell the full story.
Commercial premises may attract IVA at a different rate, and the seller’s tax status can affect how the transaction is treated. In some cases, VAT can be recoverable for eligible businesses, but only where the structure and use of the property support that position. Buying through a company does not automatically create a tax saving, and in some situations it introduces extra compliance and running costs.
For investors planning holiday lets, long-term rentals or mixed personal use, the purchase taxes are only one layer. Ongoing taxation, income treatment and ownership structure should also be considered before you reserve the property. A smart acquisition is not just about buying well – it is about holding well too.
When people ask what taxes apply when buying, they are often trying to understand the full cost of acquisition. That is sensible, because the final amount due on completion includes more than tax alone.
Notary fees, Land Registry fees and legal fees are separate from tax, but they sit alongside it in practice. Mortgage-related costs may also apply if you are financing the purchase, although Spanish mortgage law has shifted some lender-related costs away from buyers in recent years.
If you are purchasing in cash, the process can be more straightforward, but you still need a realistic allowance for administration and professional support. Buyers who budget only for the headline price and purchase tax often find themselves revisiting their numbers too late in the process.
As a broad guide, many buyers in Andalusia allow around 10% to 13% on top of the purchase price for a resale, and around 13% to 15% for a new build, depending on the asset, financing and legal structure. That is not a formal quote, but it is a practical planning range.
Spanish authorities do not like under-declared property values, and neither should serious buyers. If the declared purchase price appears too low compared with reference values or market evidence, the tax office may assess a higher taxable base.
That can lead to additional tax, interest and potential penalties. It can also create complications later if you sell, because an artificially low acquisition value may affect future capital gains calculations. For premium property buyers, transparency is usually the wiser route.
A well-managed purchase should balance tax efficiency with defensible reporting. That is particularly important for international clients who want a clean ownership history and no unpleasant correspondence after completion.
The best time to understand purchase taxes is before you make an offer, not after a reservation contract has been signed. At that stage, decisions about budget, ownership names, financing and property type are still flexible.
This is where experienced local guidance adds real value. The difference between a resale penthouse and an off-plan flat is not only about style, views or delivery date. It also changes the tax profile, cash flow and timeline of the purchase.
For buyers comparing several Costa del Sol opportunities, a proper side-by-side cost view can be more revealing than the marketing brochure. A lower asking price does not always mean a lower total acquisition cost, and a more expensive home may make better long-term sense if it aligns with your intended use and avoids major refurbishment.
At Sunny Coast Homes, we see this regularly with relocating families, second-home buyers and investors who want the process handled with clarity from the first conversation. The right property should feel exciting, but the numbers should still feel calm.
If you want the simple version, what taxes apply when buying property in Spain usually comes down to this: resale homes generally attract 7% ITP in Andalusia, while new builds usually attract 10% IVA plus 1.2% AJD. Beyond that, legal, notary and registration costs also need to be factored in.
The finer points depend on the property, the seller, the location and whether you are buying as a private individual or through a business structure. That is why serious buyers benefit from tailored advice before they move from browsing to reserving.
A clear budget gives you confidence, and confidence changes the way you buy. When you know the tax position from the start, you can focus on choosing the right home on the Costa del Sol for the life or investment you actually want.
