Transfer tax in Spain: ITP vs IVA for Costa del Sol buyers
If you're buying property on the Costa del Sol, the purchase tax you owe depends on one binary question: is the home a resale or a new-build first transfer. Resale buyers pay ITP (Impuesto sobre Transmisiones Patrimoniales). New-build buyers pay IVA (Spanish VAT) plus AJD (stamp duty). The rates are not the same, the payment mechanics differ, and the tax base can be larger than the price written on the deed. This guide explains how each track works in Andalucía in 2025, walks through sample sums at €500k, €1m and €3m, and flags the traps that catch foreign buyers.
The two tracks at a glance
Spain treats a property purchase as either a second-hand transfer between private parties or a first delivery by a developer acting in the course of business. The legal characterisation drives everything.
- Resale (second or subsequent transfer): ITP applies. In Andalucía the headline rate is currently a flat 7% following the 2021 reform, applied to the higher of price or reference value.
- New-build (first transfer from developer): IVA at 10% for residential dwellings, plus AJD at 1.2% in Andalucía on the notarial deed. Combined headline burden: 11.2%.
- Plots, commercial units and parking sold separately: IVA at 21% may apply rather than 10%. Check the unit description on the deed.
Rates are set by the autonomous community for ITP and AJD, and by the state for IVA. Andalucía's figures above should be reconfirmed with your gestor or asesor fiscal at the time of signing, because regional finance laws change.
Which tax applies to which transaction
New-build first transfer
This is the sale of a finished dwelling from the developer to its first owner. The keys have never been handed over before. The developer charges IVA on the price, the buyer pays it on completion, and the developer remits it to Hacienda. AJD is paid separately by the buyer when the deed (escritura) is registered.
Resale
Any subsequent transfer is a resale, even if the property is only weeks old and the first owner never moved in. If a developer's unsold stock is transferred to a related entity and then resold, that second sale typically falls under ITP. The same applies to bank repossessions resold to retail buyers.
Off-plan purchases
Stage payments to a developer during construction also attract IVA at 10% on each instalment, with AJD due on the final deed of sale. If you assign a contract before completion, the tax treatment of the assignment can be complex and warrants specific advice.
How the tax base is calculated
For IVA, the base is the price agreed with the developer, net of VAT. The 10% is added on top and shown on the invoice. AJD is calculated on the same deed value.
For ITP, the rules changed materially in 2022. The tax base is now the higher of:
- the price stated in the deed of sale, or
- the valor de referencia (reference value) published by the for that specific property.
The reference value is a cadastral figure derived from notarial transaction data in the area. It is updated annually. If the 's reference value for a villa is €1.4m and you agree a price of €1.2m, ITP is calculated on €1.4m, not €1.2m. You can challenge the reference value after paying, but the burden of proof sits with the taxpayer and the process is slow.
New-build IVA is not subject to the reference value rule. This is one practical reason new-build pricing can feel cleaner from a tax-planning perspective, though the headline rate is higher.
Payment mechanics and deadlines
New-build (IVA + AJD)
- IVA is paid to the developer on completion day, alongside the balance of the purchase price. The developer issues a VAT invoice.
- AJD is self-assessed on Form 600 and paid to the . Deadline: 30 business days from the date of the notarial deed.
- The Land Registry will not register your title until AJD is paid and the form stamped.
Resale (ITP)
- ITP is self-assessed by the buyer on Form 600, filed with the .
- Deadline: 30 business days from signing the deed.
- Payment is by bank transfer or direct debit through an authorised credit institution. Proof of payment is then presented at the Land Registry for inscription.
In both cases a gestor usually handles filings as part of the closing package. Expect to receive draft Form 600 calculations before signing so you can fund them.
Sample calculations: €500k, €1m and €3m
The figures below cover purchase tax only. They exclude notary fees, Land Registry fees, legal fees and any mortgage costs, which together typically add another 1% to 1.5% of price.
Resale (ITP at 7% in Andalucía)
- €500,000 purchase: ITP = €35,000. Assumes reference value does not exceed the price.
- €1,000,000 purchase: ITP = €70,000.
- €3,000,000 purchase: ITP = €210,000.
If the reference value sits 10% above your agreed price, the bills become €38,500, €77,000 and €231,000 respectively. The extra is unavoidable unless you successfully challenge the reference value.
New-build (IVA at 10% + AJD at 1.2%)
- €500,000 purchase: IVA = €50,000 + AJD = €6,000. Total = €56,000.
- €1,000,000 purchase: IVA = €100,000 + AJD = €12,000. Total = €112,000.
- €3,000,000 purchase: IVA = €300,000 + AJD = €36,000. Total = €336,000.
Direct comparison
At €1m, the headline gap between a resale at 7% (€70,000) and a new-build at 11.2% (€112,000) is €42,000. The new-build premium of 4.2 percentage points is consistent across price points. Buyers sometimes use this delta to negotiate developer price, or to weigh build quality and warranty against the tax saving on a resale.
Worked example: a €1.2m villa in Estepona
Take a buyer purchasing a four-bedroom villa with a private pool, completing in October.
- Scenario A, resale: Agreed price €1,200,000. Reference value €1,250,000. ITP base is €1,250,000. ITP at 7% = €87,500.
- Scenario B, new-build: Agreed price €1,200,000 plus IVA. IVA at 10% = €120,000. AJD at 1.2% on deed value of €1,320,000 (the practice of applying AJD to the IVA-inclusive figure should be confirmed with your gestor, as criteria vary) ≈ €15,840. Total purchase tax ≈ €135,840.
The resale buyer pays roughly €48,000 less in purchase tax. The new-build buyer receives a 10-year structural warranty, current building regulations compliance and energy efficiency that may translate to lower running costs. Neither track is universally cheaper once whole-of-life economics are considered.
Exemptions and reduced rates
Exemptions in this area are narrow and rarely applicable to foreign buyers of Costa del Sol second homes. Categories worth knowing about:
- Large families, young buyers and disability: Andalucía has historically offered reduced ITP for primary residences under defined thresholds. These reliefs typically require habitual residence in Spain and price caps well below mid-market Costa del Sol levels.
- VPO (subsidised housing): Reduced IVA at 4% applies to certain officially protected dwellings. Standard Costa del Sol stock does not qualify.
- Company purchases: A Spanish trading company acquiring property as a business asset may recover IVA in some circumstances. This is a specialist area and depends on the company's IVA-registered activity.
Do not assume an exemption applies. Any relief must be claimed correctly on Form 600 with supporting documentation. A qualified asesor fiscal should validate eligibility before completion.
Common pitfalls
- Ignoring the reference value: Buyers focused on negotiating the deed price sometimes discover the ITP bill is based on a higher cadastral figure. Always pull the reference value for the specific cadastral reference before agreeing terms.
- Assuming new equals new-build: A villa completed two years ago and sold by its first private owner is a resale. ITP applies, not IVA. Confirm the chain of title with your abogado.
- Mis-categorised parking and storage: Garage spaces and trasteros sold separately from a dwelling, or in quantities above two per home, can attract IVA at 21%. Check how units are allocated in the purchase contract.
- Plot purchases: Buying a building plot from a developer typically attracts IVA at 21%, not 10%. The 10% rate is reserved for dwellings.
- Missing the 30-day filing window: Late Form 600 filings attract surcharges starting at 1% per month and interest. The Land Registry will refuse to inscribe until tax is settled, leaving title in legal limbo.
- Funding the tax in foreign currency: Sterling or dollar transfers on completion day rarely arrive in time. Pre-fund a Spanish euro account at least a week ahead.
- Confusing IVA with ITP on company structures: Buying through a Spanish SL does not automatically convert IVA to ITP or vice versa. The transaction's nature governs the tax, not the buyer's legal form.
- Expecting purchase tax to grant residency: The Spanish Golden Visa investor route closed on 3 April 2025 under Organic Law 1/2025. Property purchases no longer support residency applications under that programme. If residency is a goal, discuss alternative visa categories with a qualified immigration lawyer before structuring your purchase.
The role of the gestor
A gestor is an administrative specialist who handles tax filings, Land Registry submissions and utility transfers. On a standard Costa del Sol transaction, the gestor typically:
- prepares Form 600 with the correct tax base, including reference value verification;
- arranges payment of ITP or AJD from buyer funds held in escrow at the notary;
- lodges the deed at the relevant Land Registry, usually within a few days of signing;
- collects the inscribed deed once the Registrar has completed the entry, often four to eight weeks later;
- handles the change of name on IBI (local council tax) and basura (refuse charge) records.
Your abogado instructs the gestor and reviews the filings. Buyers should still request copies of stamped Form 600 receipts and the inscribed deed for their own records.
Regional variation: why Andalucía rates need re-checking
This guide assumes Andalucía. Rates differ in other autonomous communities. Catalonia applies ITP at 10% or 11% on higher values. Valencia sits at 10%. Madrid is 6%. Even within Andalucía, the autonomous government can adjust rates in the annual budget law. The 7% ITP figure cited here reflects the post-2021 reform that simplified what was previously a sliding scale.
If you're comparing properties across regions, do not rely on Costa del Sol rates as a default. Always confirm current numbers for the autonomous community where the property sits, on the date you sign, with a qualified Spanish tax professional.
When to engage professional advisers
Purchase tax is one of the largest single line items in a Spanish property transaction. Get specialist input before you sign anything binding.
- Spanish abogado (property lawyer): engage at offer stage. They confirm whether the transaction falls under ITP or IVA, review the contract, run due diligence on title, and instruct the gestor.
- Asesor fiscal (tax adviser): engage where the deal involves a company structure, cross-border tax residency questions, or potential exemptions. Also useful for forecasting ongoing taxes such as IBI, wealth tax and non-resident income tax.
- Gestor: usually appointed by your lawyer. Confirm scope and fees in advance.
- Spanish mortgage broker: if financing, engage early because purchase tax must be funded from your own equity. Spanish banks lend on price net of taxes, so a 70% loan-to-value mortgage on a €1m new-build still requires roughly €412,000 of cash at completion (€300,000 deposit, €112,000 IVA and AJD, plus fees).
- Immigration lawyer: if Spanish residency is part of the plan, discuss current visa routes separately from the purchase. Property ownership and residency are independent matters under the post-April 2025 framework.
Build the full tax cost into your budget from the first viewing, not the week before completion. The difference between 7% and 11.2% on a Costa del Sol home is enough to reshape which property you can comfortably afford.
Frequently asked
Do I pay ITP or IVA when buying a new-build apartment from a developer?
If you are the first owner taking delivery directly from the developer, you pay IVA at 10% plus AJD at 1.2% in Andalucía, for a combined headline burden of 11.2%. ITP does not apply to first transfers from a developer acting in the course of business.
If the same unit has already been sold once, even briefly, the second sale is a resale and ITP at 7% applies instead. Bank repossessions and units transferred between related developer entities before retail sale typically fall under ITP. Confirm the legal characterisation with your lawyer before signing the reservation contract.
What is the valor de referencia and how does it affect my tax bill?
The valor de referencia is a cadastral figure published annually by the for each property, derived from notarial transaction data in the area. Since 2022, ITP is calculated on the higher of the deed price or the reference value.
If you agree a price of €1.2m but the reference value is €1.4m, ITP is calculated on €1.4m. The reference value rule does not apply to new-build IVA, which is always calculated on the agreed price. You can challenge a reference value after paying, but the burden of proof sits with the taxpayer and the process is slow.
When is AJD stamp duty due and who pays it?
AJD (Actos Jurídicos Documentados) is paid by the buyer on new-build purchases in Andalucía at 1.2% of the deed value. It is self-assessed on Form 600 and filed with the within 30 business days from the date of the notarial deed.
The Land Registry will not inscribe your title until AJD is paid and Form 600 stamped. In practice your gestor handles the filing as part of the closing package. AJD is not charged on resale ITP transactions, because the 7% ITP rate already covers the documentary tax element.
Can I reclaim the IVA I paid on a new-build property?
For a residential dwelling bought as a private individual for personal use, IVA is a final cost and cannot be reclaimed. This applies to almost all foreign buyers purchasing a second home or holiday villa on the Costa del Sol.
IVA recovery may be possible in narrow commercial scenarios, for example if you purchase through a Spanish company that will use the property for taxable business activity such as professional short-term rentals subject to IVA. The rules are technical and require professional structuring from day one. This is not legal or tax advice; consult a Spanish tax adviser before assuming any recovery is available.
Are off-plan stage payments taxed the same way as a finished new-build?
Yes. Stage payments to a developer during construction attract IVA at 10% on each instalment, invoiced by the developer at the time of payment. AJD at 1.2% is then due on the final deed of sale once the property is delivered and registered.
If you assign your off-plan contract to a third party before completion, the tax treatment becomes more complex and depends on whether the assignment is characterised as a transfer of rights or a property transmission. Specific advice is essential before signing any assignment, as the tax bill on both sides can shift materially.
Is a new-build always more expensive than a resale once tax is included?
On purchase tax alone, yes. The headline gap is 4.2 percentage points: 11.2% combined IVA plus AJD versus 7% ITP. On a €1m purchase that is €42,000 of extra tax for the new-build buyer.
Whole-of-life economics can narrow or reverse the gap. New-builds carry a 10-year structural warranty, comply with current building regulations, and typically deliver better energy performance, which reduces running costs. Resales may need refurbishment, updated installations or community-imposed works. Compare total cost of ownership over your expected holding period, not just the tax line at completion.
What happens if I miss the 30-day deadline for Form 600?
Late filing of ITP or AJD triggers surcharges and interest under Spanish general tax law. Surcharges scale with delay, starting modestly for voluntary late filings before any Hacienda notification, and rising sharply if the tax authority issues a demand first.
More practically, the Land Registry will refuse to inscribe your title until the form is filed and paid. You technically own the property under the deed, but unregistered title creates problems for future sale, mortgage refinancing and inheritance. Your gestor should file within deadline as standard. If a delay looks likely, file and pay on a provisional basis rather than wait.
Do reduced ITP rates for primary residences apply to foreign buyers?
Rarely. Andalucía offers reduced ITP rates for defined categories such as large families, young buyers under age thresholds, and buyers with recognised disability, but these reliefs typically require habitual residence in Spain and apply only to primary residences under price caps well below mid-market Costa del Sol levels.
Foreign buyers purchasing a second home, holiday villa or investment property almost never qualify. If you are relocating to Spain as your main residence and the property falls within the price thresholds, ask your tax adviser to review eligibility before signing. The reliefs are not automatic and must be claimed on the Form 600 filing.
Legal notice
Tax rates and bands change frequently and vary by autonomous community. Always verify current Andalucía rates with the regional tax office or a gestor at the time of purchase.
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