WHAT TAXES DO YOU NEED TO PAY WHEN BUYING A PROPERTY IN COSTA DEL SOL?

The Costa del Sol is a dream destination for many international buyers—but turning that dream into reality requires more than just knowing the purchase price. Spain’s property market comes with its own set of taxes, fees, and legal costs that every buyer must understand to avoid unexpected surprises. Whether you're purchasing an apartment, a villa, or a townhouse, knowing what taxes apply will help you budget properly and plan ahead.

This article breaks down exactly what you’ll pay when buying property in Costa del Sol, whether you're investing in a resale apartment, a new development, or a luxury villa.

1. PROPERTY TRANSFER TAX (ITP) – FOR RESALE PROPERTIES

If you’re buying a second-hand or resale property, the main tax is the Impuesto de Transmisiones Patrimoniales (ITP), or Property Transfer Tax.

• Rate: Usually between 7% and 10% depending on the autonomous region and property value.
  In Andalusia (where Costa del Sol is located), as of now:

  • 7% flat rate applies to all resale property transactions.

• Based on: The declared purchase price or the reference cadastral value (whichever is higher).

Tip: Ensure your lawyer checks the reference value to avoid under-declaration penalties.

2. VAT (IVA) & STAMP DUTY (AJD) – FOR NEW PROPERTIES

If you're buying a brand-new property directly from a developer (never lived in), you’ll pay Value Added Tax (IVA) and Stamp Duty (AJD) instead of ITP.

• VAT (IVA):

  • 10% of the purchase price for residential property

  • 21% for plots of land or commercial property

• Stamp Duty (AJD):

  • Ranges from 1% to 1.5%, depending on the region.
    In Andalusia, it is 1.2%.

So for a new apartment priced at €500,000:

• IVA = €50,000

• AJD = €6,000

• Total tax = €56,000

3. NOTARY FEES

All property purchases in Spain must be formalized in front of a Notario Público. Notary fees are regulated and depend on the price and complexity of the transaction.

• Typical range: €600 – €1,200

• Paid by: The buyer (unless agreed otherwise)

4. LAND REGISTRY FEES

Once signed, the title deed (escritura) must be registered at the Registro de la Propiedad.

• Cost: Around 0.1% to 0.3% of the purchase price

• Purpose: Legally establishes ownership and protects against third-party claims.

5. LEGAL FEES (YOUR LAWYER)

Though not legally required, hiring an independent lawyer is essential. Your lawyer will:

• Conduct due diligence

• Verify the legality of the property

• Handle the tax payments and registrations

• Typical fee: 1% of the property purchase price + VAT
  (Often negotiable or fixed-fee depending on the firm)

6. BANKING & MORTGAGE COSTS (IF APPLICABLE)

If you finance your purchase through a Spanish mortgage, expect additional fees:

• Bank valuation: €300 – €600

• Mortgage arrangement fee: 0.5% – 1% of the loan amount (varies by bank)

• Notary and registration for the mortgage deed

Since Spain’s mortgage laws shifted (Ley Hipotecaria 2019), the banks now absorb many of these costs, including AJD for the mortgage.

7. ADDITIONAL EXPENSES TO CONSIDER

• Utility setup & name transfers: €300 – €500

• Home insurance: Required if buying with a mortgage

• Currency exchange fees (if buying from outside the Eurozone)

• Furniture & interior setup (if buying unfurnished or off-plan)

COST SUMMARY: ESTIMATED BUYING COSTS IN COSTA DEL SOL

Total additional costs:

• Resale property: typically 8% – 10% of the purchase price

• New build property: around 11% – 13%

DON’T UNDERESTIMATE THE TAX FACTOR

Many buyers budget for the asking price and overlook the 8–13% in additional acquisition costs. In competitive areas like Marbella, Estepona, and Benahavís, underestimating closing costs could stall your deal.

TAXES TO PAY AFTER PURCHASING A PROPERTY IN COSTA DEL SOL

Once you become a property owner in Costa del Sol, you’ll need to consider the following ongoing taxes and costs:

1. IBI – Real Estate Tax

• Annual municipal tax based on the cadastral value of the property

• Payable to the local town hall

• Obligatory for residents and non-residents

2. INCOME TAXES

• If you are a Spanish tax resident (living in Spain for more than 183 days/year):
  You must declare the property on your annual IRPF (Personal Income Tax) return.

• If you are a non-resident:
  You must pay IRNR (Non-Resident Income Tax) annually:

  • 19% on rental income for EU/EEA citizens

  • 24% for non-EU/EEA citizens

  You may file this yourself or appoint a tax representative in Spain.

3. WEALTH TAX

• Wealth Tax applies to:

  • Residents owning property over €700,000

  • Non-residents owning property over €3 million

• Note: Andalusia has suspended Wealth Tax, but the national government has introduced a Solidarity Tax.

4. GARBAGE COLLECTION TAX

A small municipal fee applied to all property owners, varying by location and property type.

5. COMMUNITY FEES

If your property is part of a residential complex, you will pay monthly community fees for maintenance, security, and shared facilities.

A FINAL WORD OF ADVICE

This guide offers a general overview of the taxes related to buying and owning property in Costa del Sol as a private individual. Keep in mind that tax regulations may vary depending on your situation, the property's location, and changing laws.

We strongly recommend working with a lawyer or tax advisor during the buying process. Professional advice helps you:

• Ensure compliance with Spanish law

• Make informed decisions

• Receive valuable support even after the sale

LOOKING FOR TRANSPARENCY IN YOUR BUYING PROCESS?

At AMA Home Spain, we provide all our clients with a personalized "Total Cost Breakdown" before signing any contract. You’ll know exactly what you’re paying, when, and why—no surprises, no fine print.

Call us today at +34 663 671 888 or email [email protected] and connect with our trusted legal team in Marbella.