Buying property on the Costa del Sol involves more than the purchase price. Buyers should also budget for purchase taxes, legal checks, notary and registry costs, mortgage-related costs if financing is used, and annual ownership expenses.
The exact amount depends mainly on whether the property is resale or new-build, whether the purchase is financed, the municipality where the property is located and the buyer’s personal situation.
Last reviewed: 27 June 2026
Important: this article is general information only. It is not legal, tax or financial advice. Buyers should confirm all costs with a Spanish lawyer or tax adviser before signing a reservation contract.
Quick Summary
- Resale homes on the Costa del Sol are generally subject to ITP, with a general rate of 7% in Andalusia.
- New-build homes are generally subject to 10% VAT plus AJD, which is generally 1.2% in Andalusia.
- The tax base for resale property may depend on the purchase price and the cadastral reference value.
- Buyers should calculate the total acquisition cost, not only the advertised property price.
Quick comparison
| Property type | Main tax | Typical rate in Andalusia | Notes |
|---|---|---|---|
| Resale residential property | ITP | 7% general rate | Tax base may depend on purchase price and cadastral reference value |
| New-build residential property | VAT | 10% general rate | Usually paid to the developer |
| New-build deed / notarial document | AJD | 1.2% general rate | Usually paid in addition to VAT |
| Commercial or non-residential property | VAT / ITP | case by case | Requires tax review |
Resale property costs
If you buy a resale property on the Costa del Sol, the main purchase tax is usually ITP, the property transfer tax.
In Andalusia, the general ITP rate for real estate is currently 7%.
Example:
Property price: €500,000
Estimated ITP:
€500,000 × 7% = €35,000
This is only the transfer tax. Buyers should still budget for lawyer fees, notary, land registry, possible mortgage costs and post-completion setup costs.
However, buyers should not calculate ITP only from the advertised price without checking the tax base.
For Spanish resale property, the taxable base may be affected by the cadastral reference value. If the cadastral reference value is higher than the declared purchase price, the buyer may need to calculate ITP using that higher value.
Before signing, your lawyer should check:
- the agreed purchase price;
- the cadastral reference value;
- whether the property has a valid reference value;
- whether the declared value could create a tax risk;
- whether any reduced ITP rate could apply.
Reduced ITP rates may exist in specific cases, usually linked to habitual residence, property value limits or buyer profile. Many foreign buyers purchasing a second home or investment property should not assume they qualify for reduced rates.
New-build property costs
If you buy a new-build residential property from a developer, the purchase is generally subject to VAT instead of ITP.
For most new residential homes in Spain, VAT is generally 10%.
In Andalusia, AJD is generally 1.2% and is usually paid in addition to VAT.
Example:
New-build price: €500,000
VAT:
€500,000 × 10% = €50,000
AJD:
€500,000 × 1.2% = €6,000
Estimated VAT + AJD:
€56,000
This does not include lawyer fees, notary, land registry, mortgage-related costs, furniture, snagging, utility connections or other completion costs.
For off-plan or new-development purchases, buyers should also check:
- building licence;
- bank guarantees for stage payments;
- payment schedule;
- expected completion date;
- licence of first occupation or equivalent documentation;
- snagging process;
- community fees after completion;
- whether VAT is included or excluded in the advertised price.
Other buying costs
In addition to purchase taxes, buyers should usually budget for professional and completion costs.
These may include:
- lawyer fees;
- notary fees;
- land registry fees;
- bank valuation, if using a mortgage;
- mortgage broker or arrangement costs, if applicable;
- translations;
- power of attorney, if needed;
- NIE and administrative support, if needed;
- utility connection or change-of-holder costs;
- furniture and equipment, especially for new-build or rental properties.
The exact amount can vary depending on the property price, mortgage structure, documentation and complexity of the transaction.
If you use a mortgage
Foreign buyers can often apply for a Spanish mortgage, but the final cost depends on the bank, buyer profile, property valuation and loan structure.
Before relying on financing, buyers should confirm:
- maximum loan-to-value;
- whether the mortgage is fixed, variable or mixed;
- interest rate and APR / TAE;
- valuation cost;
- bank arrangement fee, if any;
- early repayment conditions;
- required insurance or linked products;
- currency risk, if income is not in euros.
Mortgage approval should be checked before making a firm offer, especially if the purchase depends on financing.
Annual ownership costs
After completion, property owners should also budget for annual running costs.
Common annual costs include:
- IBI property tax;
- basura or local waste collection tax;
- community fees, if the property is in a building or urbanisation;
- home insurance;
- utilities;
- maintenance and repairs;
- garden or pool maintenance, if applicable;
- property management, if the owner is not living in Spain;
- non-resident income tax, if the owner is not Spanish tax resident.
IBI, basura and local costs vary by municipality. Before completion, the seller or lawyer should provide the latest receipts so the buyer can understand the real annual cost of ownership.
If the property will be rented
If the property will be rented, buyers should calculate net income after costs and taxes.
Rental income can be taxed differently depending on whether the owner is:
- Spanish tax resident;
- EU/EEA non-resident;
- non-EU/EEA non-resident.
The rental type also matters. Long-term rental, mid-term rental and tourist rental can have different tax, VAT, licensing and community-of-owners implications.
Before buying for rental income, buyers should check:
- whether tourist rental is legally possible;
- whether the community of owners allows it;
- whether local restrictions apply;
- expected occupancy;
- management fees;
- cleaning and maintenance costs;
- income tax;
- possible VAT implications;
- realistic net yield after all costs.
Gross yield is not enough. A property that looks profitable before costs may produce a very different result after tax, management, maintenance, vacancy and financing.
A note on future selling costs
Although this article focuses on buying costs, investors should also remember that selling a property in Spain can involve exit costs.
These may include estate agency fees, lawyer or tax adviser fees, mortgage cancellation costs, capital gains tax and municipal plusvalía tax.
Plusvalía municipal is a local tax linked to the increase in value of urban land. It is separate from capital gains tax and should be checked with the town hall or the seller’s lawyer before completion.
If the seller is non-resident in Spain, the buyer normally withholds 3% of the sale price and pays it to the Spanish Tax Agency as an advance payment toward the seller’s possible capital gains tax.
This 3% withholding is not always the final tax. The non-resident seller normally declares the sale through Modelo 210. If the final tax is lower than the 3% withheld, or if there is no taxable gain, the seller may claim a full or partial refund. If the final tax is higher, the seller may need to pay the difference.
If the seller is a non-resident individual, the buyer’s lawyer should also check whether the buyer may have any substitute taxpayer responsibility for plusvalía municipal.
What your lawyer should check
Before signing a private purchase contract, your lawyer should check:
- Land Registry information;
- seller ownership;
- mortgages, charges or debts;
- community debts;
- IBI and local tax receipts;
- cadastral information;
- cadastral reference value;
- building licences and first occupation documentation, where relevant;
- community statutes and rules;
- urban planning situation;
- rental restrictions, if relevant;
- purchase contract terms;
- tax calculation;
- payment deadlines after completion.
A good legal review is especially important if the property is new-build, off-plan, rented, recently renovated, rural, tourist-use or part of a complex community structure.
Bottom line
When buying on the Costa del Sol, the safest approach is to calculate the total acquisition cost before making an offer.
As a simple guide:
- resale property: budget for ITP plus professional and completion costs;
- new-build property: budget for VAT, AJD and professional and completion costs;
- financed purchase: add mortgage-related costs;
- rental investment: calculate net yield after tax, costs and vacancy;
- future sale: remember exit taxes and selling costs.
The advertised property price is only the starting point. The real buying budget should include taxes, legal checks, completion costs and the first year of ownership expenses.
