Property Purchase Taxes in Spain 2026 -- Everything You Need to Know Before You Buy

VAT, stamp duty equivalent, transfer tax, capital gains -- the Spanish property tax system explained in plain English, with figures, UK comparisons and the double taxation rules

Introduction: Why You Need to Know This Before You Sign Anything

When buying property in Spain for the first time, one of the most common financial surprises is not the purchase price itself -- it is how much is payable in taxes and fees on top of it. Many buyers budget for the listed price and discover only later that the true cost is significantly higher.

The reassuring news: these taxes are not surprises if you know about them in advance. They are fixed, calculable and entirely predictable. This guide sets them all out clearly -- what each tax is, when it is due, how much it will be, and how it interacts with your UK tax position.

One important note before we begin: the tax rates in this guide apply to the Valencian Community (Comunidad Valenciana) -- the region where the Costa Blanca is located. Other Spanish regions (Madrid, Catalonia, Andalusia) have different rates.

1. The First Question: New-Build or Resale -- Completely Different Tax Systems

The most important distinction in Spanish property taxation is this: new-build and resale properties are taxed under entirely different systems.

At first glance, new-build appears more expensive from a tax perspective. But when you factor in the legal warranties (10-year structural, 3-year waterproofing), lower maintenance costs for the first decade, A or B energy rating, and higher rental appeal, the tax difference is typically recovered within 3--5 years of ownership.

2. IVA -- Spanish VAT on New-Build Property

IVA (Impuesto sobre el Valor Añadido) is Spain's VAT -- the direct equivalent of UK VAT, applied at different rates and in a notably different way than British buyers typically expect.

The Rate

• Residential properties (apartments, houses, villas): 10% of the purchase price
• The first two garage spaces or storage units included in the same purchase: also 10% -- provided they are listed together with the property in the same contract
• Any additional garage spaces or storage units beyond the first two: 21% -- a detail that surprises many buyers

When Is IVA Due? -- The Off-Plan Difference

This is one of the most important points to understand, particularly for off-plan purchases -- and one where the Spanish system works very differently from what UK buyers are used to.

IVA is not paid once at completion -- it is due on every individual stage payment, immediately. This means:

• When you pay a €10,000 reservation deposit → you simultaneously pay €1,000 IVA
• When you pay a €50,000 construction stage payment → you simultaneously pay €5,000 IVA
• When you pay the remaining €240,000 at key handover → you pay €24,000 IVA

The developer invoices the IVA separately on each payment. But the key point for budgeting: every payment you make is 10% more than the headline figure shown.

A Concrete Example -- €300,000 Off-Plan Purchase:

3. AJD -- The Stamp Duty Equivalent

AJD (Actos Jurídicos Documentados) is the tax on notarially certified documents -- broadly comparable to UK Stamp Duty Land Tax (SDLT), though the mechanics are different. It applies only to new-build properties, not resales.

The Rate on the Costa Blanca

1.4% of the purchase price -- fixed, not banded or progressive as UK SDLT is in the Valencian Community.

On a €300,000 purchase: €4,500.

When Is It Due?

AJD must be paid to the local tax authority (Agencia Tributaria Valenciana) within 30 days of signing the notarial deed (Escritura de Compraventa). Your lawyer or gestor typically handles this filing, but the 30-day window is firm.

AJD and Mortgages -- A 2018 Change That Saved Buyers Money

Before 2018, buyers were required to pay AJD not only on the purchase price but also on the mortgage amount. This was a significant additional cost that many buyers still believe applies.

Since November 2018, by law, the AJD on the mortgage amount is paid by the bank -- not the buyer. This was a landmark ruling by Spain's Supreme Court, subsequently enshrined in legislation. If you take out a Spanish mortgage, you do not pay AJD on the loan amount. This is a meaningful saving that is sometimes still incorrectly quoted as a buyer cost.

4. ITP -- Transfer Tax on Resale Properties

If you are purchasing a resale property rather than new-build, IVA and AJD are replaced by a single tax: ITP (Impuesto sobre Transmisiones Patrimoniales -- property transfer tax).

The Rate on the Costa Blanca

9% of the purchase price -- and this is the only main property-specific tax on a resale purchase (lawyers' fees, notary and registry costs still apply).

ITP vs. UK Stamp Duty -- Understanding the Difference

British buyers sometimes confuse ITP with Stamp Duty Land Tax, but the logic is different:

• UK SDLT is banded and progressive -- different rates apply to different portions of the price
• Spanish ITP is a flat percentage of the total purchase price -- simpler to calculate but potentially less favourable on higher-value properties
• There is no Spanish equivalent of the UK's SDLT first-time buyer relief or primary residence exemptions on ITP on the Costa Blanca -- the 9% applies uniformly.

5. Can You Reclaim the IVA?

This is one of the most frequently asked questions among investors -- and the answer depends entirely on the buyer's legal status and intended use.

As a Private Individual

No -- IVA paid by a private individual on a residential property purchase is a final cost and cannot be reclaimed. The €30,000 IVA on a €300,000 purchase is gone.

As a Spanish Company (S.L.) -- When Reclaim Is Possible

If the property is purchased in the name of a Spanish limited company (S.L.) and used exclusively for commercial rental activity with hotel-like supplementary services, IVA reclaim may be possible under specific conditions:

• The company is registered for IVA (operating a VAT-taxable activity)
• The property is used solely for economic activity -- not personal use by directors or shareholders
• The rental includes supplementary services (cleaning, reception, breakfast) making it a hotel-equivalent service rather than a simple let
• The company files quarterly IVA returns (Modelo 303) consistently

When does this make sense for UK buyers? If you are purchasing above €400,000--500,000 and already have a structural reason to hold through a Spanish S.L. (multiple properties, active business activity), the IVA reclaim adds a meaningful financial argument. On a €500,000 property, the potential reclaim is €50,000.

Important: this requires specialist Spanish tax planning. The conditions are strictly interpreted and the tax authority audits this area actively. Do not form a company solely to reclaim IVA without detailed advice from a qualified Spanish tax adviser.

6. Capital Gains Tax When You Eventually Sell -- The UK Interaction

This is a topic most buyers do not think about at the point of purchase -- but understanding it from the start informs better investment decisions.

Spanish Capital Gains Tax (CGT) for Non-Residents

When you sell a Spanish property, the gain (sale price minus purchase price and associated costs) is taxable in Spain. For non-resident sellers, this is taxed under the IRNR (Impuesto sobre la Renta de No Residentes).

The rate for non-EU nationals (including UK nationals post-Brexit): 19%

This flat 19% rate applies to the full net gain, regardless of the amount -- which compares favourably with UK CGT rates on residential property (18% or 24% depending on your income tax band, as of 2026).

The 3% Withholding at Point of Sale

When you sell, the Spanish buyer is legally required to withhold 3% of the agreed purchase price and pay it directly to the Spanish tax authority on your behalf. This acts as a tax advance for the non-resident seller.

What this means in practice:

• You agree a sale price of €400,000
• The buyer pays you €388,000 and sends €12,000 to the tax authority
• After the sale, you file a CGT return (Modelo 211) in Spain
• If your actual CGT liability is less than €12,000 (which is common if costs are correctly deducted), you reclaim the difference
• If your actual CGT liability is more than €12,000, you pay the balance

Many UK sellers are surprised by this mechanism -- particularly the initial shortfall in what they receive on the day of signing. Planning for this in advance avoids a cash flow problem at completion.

The UK--Spain Double Taxation Agreement -- Avoiding Double Tax

The UK and Spain have a double taxation agreement (DTA) that covers capital gains on property. This means:

• Spanish CGT paid on the property sale is creditable against your UK CGT liability on the same gain
• You should not pay full tax twice -- but you may owe a top-up if UK CGT rates are higher than Spanish rates in your circumstances
• The credit must be actively claimed through HMRC self-assessment
• The gain must also be declared on your UK self-assessment return in the year of sale, even if Spanish tax has already been paid

Practical advice: engage both a Spanish gestor and a UK accountant familiar with cross-border property disposals well before you sell. The interaction between the two systems requires coordinated planning.

Deductible Costs -- Reducing the Taxable Gain

The taxable gain is not simply sale price minus original purchase price. The following costs are deductible when calculating the gain:

• Original purchase price
• IVA paid at purchase
• AJD paid at purchase
• Lawyer's and notary's fees at purchase
• Cost of any capital improvements (not routine maintenance)
• Lawyer's and agent's fees at sale

Keeping records of all purchase costs from day one -- including every IVA invoice from the developer -- directly reduces your future CGT liability.

7. The Complete Purchase Cost -- Summary Table

On a €300,000 purchase, in concrete figures:

• New-build: ~€39,900 in taxes and costs
• Resale: ~€33,000 in taxes and costs

Frequently Asked Questions

(Note for web developer: mark this section with FAQ schema markup for Google "People Also Ask" visibility.)

What is IVA and how much is it on new-build property in Spain?
IVA is Spain's VAT. On new residential property it is 10% of the purchase price -- payable on every stage payment, not just at completion. On a €300,000 purchase this is €30,000 in total. Garage spaces beyond the first two are taxed at 21%.

What is AJD and is it the same as Stamp Duty?
AJD (Actos Jurídicos Documentados) is broadly comparable to UK Stamp Duty Land Tax -- it is a tax on notarially certified documents. On the Costa Blanca (Valencian Community) it is 1.4% of the purchase price on new-build properties only. Unlike UK SDLT it is a flat rate, not banded. Since 2018, the AJD on the mortgage amount is paid by the bank, not the buyer.

What is ITP and when does it apply?
ITP (Impuesto sobre Transmisiones Patrimoniales) is the property transfer tax payable when buying a resale property -- 9% on the Costa Blanca. It replaces IVA and AJD entirely; you never pay both. It is broadly analogous to SDLT but at a flat rate with no first-time buyer relief or primary residence exemptions.

Do I pay Spanish capital gains tax and UK CGT when I sell?
You are liable to both in principle, but the UK--Spain double taxation agreement prevents full double taxation. Spanish CGT paid (19% for non-residents) is creditable against your UK CGT liability on the same gain. You must declare the sale on your UK self-assessment return. Engage both a Spanish gestor and a UK accountant for any disposal.

What is the 3% withholding on property sales and can I get it back?
When a non-resident sells Spanish property, the buyer is legally required to withhold 3% of the sale price and pay it to the Spanish tax authority as a CGT advance. You then file a return -- if your actual liability is less than 3%, you reclaim the excess. Plan for this cash flow impact on the day of signing.

Can I reclaim the IVA as a UK buyer?
Not as a private individual. If purchasing through a Spanish S.L. (limited company) for exclusive commercial rental with hotel-type supplementary services, reclaim may be possible -- but the conditions are strict and require specialist Spanish tax advice. Forming a company solely to reclaim IVA is rarely straightforward.

Is it better to buy new-build or resale from a tax perspective?
New-build costs more in tax upfront (~13.3% vs ~11%), but the 10-year structural warranty, lower maintenance costs, better energy rating and higher rental appeal typically recover the difference within 3--5 years. For pure tax minimisation on purchase, resale is lower. For total cost of ownership over 10 years, new-build is usually comparable or better.

What costs can I deduct from the capital gain when I sell?
The original purchase price, IVA and AJD paid at purchase, lawyer's and notary's fees at purchase, capital improvement costs (not routine maintenance), and selling costs (agent's and lawyer's fees). Keeping all purchase invoices from day one directly reduces your future CGT bill -- including every IVA invoice from the developer.

Summary: What You Pay and When

Spanish property taxes are not complicated -- but they need to be understood before you commit. Buyers who calculate the full tax and cost burden in advance avoid surprises and make better-informed decisions.

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Last updated: 2026. Tax rates and rules are subject to change. Always consult a qualified Spanish tax adviser and, for UK nationals, a UK accountant familiar with cross-border property taxation before making investment decisions.

If you have questions, our team is happy to help.