Taxes When Buying

Buying property in Spain is a significant step that opens up many opportunities: life by the warm sea, reliable investments, and the prospect of obtaining a residence permit. However, in addition to the price of the property itself, you need to account for additional expenses — primarily taxes and fees when completing the transaction. A clear understanding of Spain's tax system will help you plan your budget accurately and avoid unpleasant surprises. At Granfield Estate, our in-house lawyer has handled hundreds of property transactions on the Costa Blanca and knows every detail of the local tax system. In this article, we will cover all taxes and mandatory payments when buying property in Spain, with a focus on the Comunidad Valenciana — the provinces of Alicante, Valencia, and Castellón.

Mandatory Taxes When Buying Property in Spain

1. Property Transfer Tax (Impuesto de Transmisiones Patrimoniales, ITP)

ITP is the main tax when purchasing a resale property. It is paid by the buyer. In the Comunidad Valenciana, the base rate is 10% of the cadastral value or the transaction price — whichever is higher. This is why undervaluing the price in the contract provides no real tax benefit: the tax authority (Agencia Tributaria) has the right to independently assess the property's value.

In certain cases, reduced ITP rates apply. For example, young buyers under 35, families with children, or people with disabilities may qualify for a reduced rate of 4% to 8%, depending on the category and region. Verify these conditions with a lawyer in advance.

2. Value Added Tax (Impuesto sobre el Valor Añadido, IVA)

If you are purchasing new property directly from a developer, VAT (IVA) applies instead of ITP. The IVA rates for property purchases in Spain are:

• 10% — for residential property (apartments, houses, townhouses)
• 21% — for commercial property, parking spaces (purchased separately), and land plots
• 4% — for officially designated affordable housing (Viviendas de Protección Oficial, VPO)

Important: ITP and IVA are mutually exclusive. The secondary market always means ITP. The primary market (from a developer) always means IVA. Never both simultaneously.

3. Stamp Duty (Actos Jurídicos Documentados, AJD)

AJD is charged when any real estate transaction is notarially certified. In the Comunidad Valenciana, the standard rate is 1.5% of the transaction value.

When purchasing a resale property, AJD is paid in addition to ITP — a small fixed amount for document certification. When buying new property, AJD is calculated on the full value at 1.5%. A significant benefit: if the property will be your primary residence (residencia habitual), AJD is reduced to 0.1% or waived entirely in many regions.

AJD is also paid when taking out a mortgage — however, since 2019, the bank bears these AJD costs, not the buyer.

Notary Fees and Registration Costs

Notary (Notaría)

Property sales in Spain must be formalized through a notary. Notary fees are regulated by the state and depend on the property value. Approximately, notary costs range from €600 to €1,500 for properties worth up to €300,000. For more expensive properties, costs scale proportionally.

Property Registry (Registro de la Propiedad)

After signing at the notary, the transaction is registered in the Property Registry. Registry fees are also fixed by law and amount to approximately €400 to €1,000 depending on the property value. Registration confirms your ownership rights and protects against third-party claims.

Administrative Management (Gestoría)

Most transactions go through a gestoría — a specialized office that coordinates document submission to the tax authority, registration, and interaction between the notary, bank, and buyer. Gestoría services typically cost €300–€500.

Property Valuation (Tasación)

If you are taking out a mortgage, the bank will require a professional property valuation. Tasación costs range from €300 to €700 depending on the type and value of the property. If purchasing without a mortgage, a valuation is not required.

Total Transaction Costs: How Much to Budget Above the Property Price

The standard guideline is to budget 10–13% of the property price for taxes and transaction costs:

• Secondary market without mortgage (Alicante): ~10–11% (ITP 10% + notary + registry + gestión)
• Secondary market with mortgage: ~11–12% (adds valuation; bank covers some costs)
• New build without mortgage: ~12–13% (IVA 10% + AJD 1.5% + notary + registry)

Annual Taxes on Property Ownership

In addition to one-time purchase taxes, property owners in Spain must pay annually:

• IBI (Impuesto sobre Bienes Inmuebles) — property tax, similar to rates in other countries. The rate is 0.4–1.1% of the cadastral value. In Torrevieja and Alicante, for a typical apartment: €200–€600 per year.
• Tasa de basuras — municipal waste collection fee. Usually €80–€200 per year.
• IRNR (Non-Resident Income Tax) — even if you don't rent out your apartment, Spain imputes a notional income from ownership: 1.1% of cadastral value, taxed at 19% (EU citizens) or 24% (others). The resulting amount for a typical Alicante apartment: €150–€400 per year.
• Community fees — homeowners' association charges for pool, garden, and lift maintenance. On average €50–€200 per month depending on the complex.

Tips to Optimize Your Tax Burden

• Check eligibility for reduced ITP. Spain has lower rates for young buyers, large families, and people with disabilities. In Comunidad Valenciana, the reduced rate for primary residence is 8% instead of 10%.
• Confirm primary residence status. If you plan to live in the property permanently, register your address (empadronamiento). This grants access to reduced AJD rates and possible deductions.
• Do not undervalue in the contract. This won't reduce your tax base (the tax authority uses independent valuations) but will create problems when selling: the difference is treated as hidden income.
• Consult a tax lawyer in advance. As a licensed agency (RAICV1663) and member of Asivega, Granfield Estate provides free tax consultations for our clients. Proper transaction structuring can save thousands of euros. External consultation costs (€200–€500) pay for themselves many times over.

Conclusion

Buying property in Spain requires careful financial planning. Beyond the property price, budget 10–13% for taxes and completion costs: ITP or IVA, AJD, notary, registry, and gestión. After purchase, plan annually for IBI, IRNR, and community fees. A thoughtful approach to tax planning will make your transaction as cost-effective as possible.

How Granfield Estate Helps with Taxes and Transaction Costs

Our in-house lawyer with 10+ years of experience handles the full tax and legal side of every purchase:

• Tax calculation before you commit: We prepare a detailed cost breakdown for your specific property — no surprises at the notary.
• Reduced rate eligibility: Our lawyer checks whether you qualify for reduced ITP, AJD exemptions, or other benefits.
• Post-purchase tax setup: IBI, IRNR, community fees — we set up everything so you don’t miss deadlines or overpay.

As a licensed agency (RAICV1663) and member of Asivega — the largest estate agents association on the Costa Blanca — we’ve guided hundreds of buyers through this process. First consultation is always free.

Granfield Estate
Av. Bélgica 1, C.C. Parquemar, La Mata, 03188 Torrevieja (Alicante)
Tel: +34 865 44 33 33
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Frequently Asked Questions

How much should be added to the price of the property for taxes and expenses?

Budget 10–12% on top of the property value. For the secondary market in the Valencia Community, this generally includes: ITP — 10%, notary fees — 600–1,500 €, registration in the registry — 400–900 €, gestoría (document processing) — 300–500 €. For new builds: instead of ITP — IVA (10%) + AJD (1.5%).

What is the difference between ITP and IVA when buying real estate in Spain?

ITP (property transfer tax) is paid when purchasing secondary housing — the rate in the Valencia Community is 10%. IVA (VAT) applies when buying new housing directly from the developer — also 10% for residential properties. These two taxes are mutually exclusive: you pay either one or the other, never both at the same time.

Is it worth underreporting the price in the contract to pay less ITP?

No — and it is illegal. The Spanish Tax Agency (Agencia Tributaria) has the right to independently assess the market value of the property and charge ITP at the maximum value. Underreporting the value risks additional tax assessments, fines, and penalties. Always state the actual transaction price.

Are there tax benefits when buying real estate in Spain?

Yes, in some cases. In the Valencia Community, reduced ITP rates (from 4 to 8%) are provided for buyers under 35, large families, and people with disabilities. If the property becomes your primary residence (residencia habitual), AJD is reduced to 0.1% or waived. It is advisable to clarify the conditions with a lawyer before signing the contract.

Who pays the notary fee when buying real estate in Spain?

According to established practice and legislation — the buyer. The notary fee is regulated by the state and depends on the property value: typically, 600–1,500 € for properties up to 300,000 €. The seller pays the notary fees for mortgage cancellation, if applicable. The exact calculation of all expenses for your specific transaction will be provided by the assessor at Granfield Estate.