Buying on the Costa del Sol often starts with the exciting questions – sea views, rental potential, year-round sunshine, the right area. Then the practical one arrives quickly: what taxes do foreign buyers pay when purchasing property in Spain? For overseas buyers, the answer is not difficult, but it does need to be clear from the start because taxes can materially affect your budget.
The good news is that foreign buyers are not usually taxed differently simply because they are foreign. In most cases, the taxes you pay depend more on the type of property you buy, whether it is new or resale, and whether you will own it personally or through a company. That distinction matters far more than your nationality.
If you are buying property in Spain as a non-resident, the main taxes at purchase are typically either Property Transfer Tax or VAT, plus stamp duty in certain cases. Which one applies depends on the seller and the property type.
If you buy a resale property, you normally pay Property Transfer Tax, known in Spain as ITP. In Andalusia, where the Costa del Sol sits, the standard ITP rate is currently 7% of the purchase price. This is usually the biggest tax cost for buyers of second-hand homes, whether that is a villa in Marbella, a townhouse in Estepona or a flat in Benalmadena.
If you buy a brand-new property from a developer, the tax treatment changes. Instead of ITP, you usually pay VAT, known in Spain as IVA, at 10% for residential property. On top of that, you also pay stamp duty, known as AJD, which is generally 1.2% in Andalusia. For many buyers of new developments, this makes the upfront tax bill higher than for a resale purchase.
That is why the phrase “new build premium” is not just about the price per square metre. It can also include a higher tax outlay at completion.
A resale property is usually more straightforward from a tax perspective. If the agreed purchase price is 500,000 euros, a buyer in Andalusia would generally expect ITP of 35,000 euros. That figure is significant enough that it should be part of your planning from the moment you begin viewing properties, not something left for the final week before completion.
With a new build at the same price, VAT would usually be 50,000 euros, and AJD would add another 6,000 euros. The total tax cost could therefore reach 56,000 euros. For some buyers, the appeal of a new development still outweighs that difference – lower maintenance, modern energy standards, better communal facilities and stronger rental appeal can all justify it. But the numbers should be compared honestly.
There are occasional exceptions depending on the asset class. Commercial property, land, parking spaces sold separately, or purchases through certain structures can create different tax outcomes. This is one reason premium buyers and investors benefit from tailored advice before reserving a property rather than after.
Strictly speaking, not every buying cost is a tax. But if you are planning your total acquisition budget, they belong in the same conversation.
Most buyers should also allow for notary fees, land registry fees and legal fees. These are separate from purchase taxes, yet they are unavoidable in a properly handled transaction. As a broad rule, many overseas buyers budget around 10% to 13% on top of the purchase price for taxes and buying costs combined, although new build purchases can push that figure higher.
Mortgage-related costs may also apply if you are financing the purchase. Spanish mortgage rules have changed in recent years, and banks now absorb certain costs that buyers used to pay more directly. Even so, valuation fees and related expenses can still appear. If you are arranging finance from abroad, your adviser should map these out clearly before you commit.
The question of what taxes do foreign buyers pay does not end on completion day. Owning property in Spain brings annual tax obligations, particularly for non-residents.
The most familiar one is IBI, the local council tax charged by the town hall. The amount depends on the cadastral value of the property and the local municipality. It varies from one area to another, so a buyer comparing homes across the Costa del Sol should not assume the annual charge will be identical.
Non-resident owners also usually pay non-resident income tax. This surprises many first-time overseas buyers, especially those who do not rent out their property. Spain applies an imputed income tax on second homes owned by non-residents, even when there is no actual rental income. The amount is often relatively modest, but it is still a filing obligation.
If you do rent the property out, the tax position changes again. You may need to declare the actual rental income received, and the way taxable income is calculated depends partly on whether you are resident in an EU or EEA country with applicable rights, or outside those frameworks. Since UK buyers are no longer in the EU, this area deserves extra attention. The difference can affect what expenses are deductible and how much tax is ultimately due.
For higher-net-worth buyers, Spain’s wealth-related taxes may also enter the picture. This is where broad online advice can become misleading because the rules depend on your personal asset position, residency status and regional allowances.
Non-residents may be liable for Spanish Wealth Tax on their net assets located in Spain above certain thresholds. Real estate is an obvious example. Andalusia has applied generous relief in recent years, but tax policy can evolve, and high-value property owners should not assume today’s framework will remain unchanged.
There is also a temporary Solidarity Tax on large net wealth at national level, designed to apply to very substantial assets. This will not affect most lifestyle buyers, but it can matter for clients acquiring luxury homes, multiple investment properties or larger structures involving Spanish assets.
For this reason, affluent buyers often review ownership structure before they buy, not after. A decision that looks simpler at reservation stage may become less attractive once wealth exposure, inheritance planning and future sale strategy are considered together.
Usually, no. Foreign buyers do not generally pay a special surcharge just because they are overseas. The purchase taxes on a standard residential transaction are typically the same for Spanish and non-Spanish buyers alike.
Where the experience differs is in administration and compliance. A foreign buyer may need an NIE number, a Spanish bank account, translated documentation and clearer tax reporting support after completion. The tax rates themselves are not usually punitive for being foreign, but the process can feel more complex if you are unfamiliar with Spanish property law.
This is especially true when buyers rely on assumptions from their home country. Spain has its own structure, terminology and deadlines. Missing a filing date or misunderstanding whether a property is classed as new or resale can create avoidable cost.
On the Costa del Sol, the smartest buyers do not ask only what they can afford in headline purchase price. They ask what the full acquisition and ownership cost looks like over the first year and beyond.
If your target budget is 600,000 euros, for example, you should not necessarily spend all 600,000 euros on the property itself. On a resale purchase in Andalusia, the tax alone may be 42,000 euros. Add legal, notary and registry costs, and the true amount required rises quickly. On a new build, the gap is wider.
This matters even more if you are comparing a lock-up-and-leave holiday home with an investment purchase. A holiday property may trigger ongoing ownership costs without offsetting rental income. An investment property may generate revenue, but it also creates tax declarations, potential management fees and a different risk profile. Neither route is better in every case. It depends on what you want the property to do for you.
For buyers who want a smooth purchase, the most useful approach is to get the tax position modelled early around the exact property type and your ownership plans. That is far more valuable than relying on generic percentages found in forums.
At Sunny Coast Homes, that is often where the real value of personalised service shows itself – not only in finding the right property, but in helping buyers understand the true cost of owning it with confidence.
A well-chosen home in southern Spain should feel exciting, not uncertain. When the tax side is understood from the outset, you can focus on the decision that matters most: choosing the property that genuinely fits your life, your plans and your standards.
