Costs and taxes of buying a property in Spain

Resale property: transfer tax (ITP)

Buying a second-hand home attracts Transfer Tax, a regional levy. The general rate in the Valencian Community — where Benidorm, Alicante, Torrevieja, Calpe and Villajoyosa are — is 10%, although reduced rates exist in certain cases, such as young buyers, large families, people with disabilities or officially protected housing, provided the requirements are met.

The tax is paid by the buyer and the filing deadline is short: 30 working days from signing the deed. Without paying the tax the purchase cannot be registered at the Land Registry.

New builds: VAT and stamp duty

If you buy directly from the developer on a first transfer there is no ITP: VAT at 10% applies — the reduced rate for housing; garages and storerooms bought separately are taxed at the general rate — plus Stamp Duty (AJD), which in the Valencian Community stands at 1.5% for the general rate.

This makes new builds slightly more expensive in tax terms than resale property in this region, something worth bearing in mind when comparing two options at similar prices.

The reference value: the most common surprise

Since 2022 the taxable base for transfer tax and for inheritance and gift tax is not the price stated in the deed but the reference value the Cadastre assigns to the property, where that is higher than the price.

In practice: if you buy for €150,000 a property whose reference value is €175,000, the tax is calculated on €175,000. This change catches many foreign buyers off guard, especially in below-market transactions or sales between people who know each other.

The reference value can be checked on the Cadastre's website before buying, and it can be challenged if considered disproportionate, although you must pay first and claim afterwards. Checking it is part of the pre-purchase review we run before you sign anything.

The costs that are not taxes

• Notary. Fees are set by an official scale and depend on the price of the property and the number of pages in the deed. As a guide, from a few hundred to a little over a thousand euros on typical transactions.
• Land Registry. Also on an official scale, to register the purchase in your name. Usually lower than the notary's fees.
• Gestoria. Paying the taxes, filing at the Registry and coordinating the subsequent formalities. It is optional, but if a bank is financing the purchase it will usually impose its own.
• Valuation. Only where there is a mortgage; paid by the buyer.
• Nota simple and certificates. A minor cost, but essential to check charges and ownership.

Since the 2019 mortgage reform, most loan-related costs — mortgage notary, registry, gestoria and stamp duty on the loan — fall to the bank; the buyer is left with the valuation. This is worth verifying in the binding offer.

A realistic estimate

For a resale home in the Valencian Community, taxes and costs together usually come to around 12% of the price: 10% transfer tax plus 1.5–2% for notary, registry and gestoria. On a new build, with VAT and stamp duty, the figure tends to be somewhat higher.

The practical recommendation is to set aside 13–15% on top of the price if you also want to cover post-purchase costs: connecting utilities, small initial works and the first IBI bill.

What comes after the purchase

• IBI, the annual municipal property tax, and the refuse charge.
• Community of owners fees and any special levies approved.
• Modelo 210 if you are not tax-resident in Spain: imputed income each year, or rental income if you let the property. We cover it in this guide.
• Wealth tax, if the value of your assets in Spain exceeds the applicable exempt minimum.

And in the future, when you sell, the municipal plusvalia and the capital gain come into play. That is why it is worth keeping the purchase invoices and those for any renovation from day one: they reduce the gain that will be taxed years later.

The order things happen in

1. Land Registry and planning checks on the property, before you commit.
2. The deposit contract, reviewed before you sign it.
3. Signing the deed before the notary, with an interpreter if you need one.
4. Paying the taxes within the deadline.
5. Registration at the Land Registry.
6. Transferring the utility contracts and the IBI into your name.

There is a summary of the costs in this frequently asked question. At Asistenio we calculate the total cost before you sign the deposit contract, so the budget you work to is the real one and not the one in the listing.