When planning to buy a new-build home in Spain, the biggest mistake is comparing only the prices shown on property portals. Transaction taxes, legal and administrative fees, and practical expenses all come on top of the purchase price. These vary by region, property type and the details of the transaction.
VAT on a new-build home
As a general rule, the first supply of a new-build home by a developer is subject to Spanish VAT (IVA) at 10%. There are exceptions, including certain categories of protected housing. The rules for residential properties should not automatically be applied to land, commercial premises or garages sold separately.
AJD, notary and registry fees
Buying a new-build home may also be subject to stamp duty on documented legal acts (AJD), with the rate depending on the autonomous community and the buyer’s circumstances. You should also allow for notary fees and the cost of registering ownership with the Land Registry. If you take out a mortgage, there will also be financing-related expenses, although not all of them are payable by the buyer.
A sample purchase budget
Suppose the property price is €250,000. VAT alone, at 10%, comes to €25,000. This is not the full amount of the additional costs: you still need to establish the applicable AJD, legal and administrative fees, furnishing and equipment costs, and any advisory fees. Before reserving, ask for a personalised, itemised estimate in euros.
Expenses after the purchase
Owners pay regular community fees, local property tax (IBI), utilities, insurance and, where applicable, property management fees. Anyone who is not a Spanish tax resident should also discuss with an adviser the tax obligations arising from owning the property and renting it out.
How to compare developers’ offers
Ask for the tax-inclusive price, usable floor area, handover specifications, details of parking spaces and storage rooms, the payment schedule, community fees and taxes. Check what is included in the price: appliances, air conditioning, furniture and the garden may be charged separately.
Summary
The safest approach is to treat the advertised price as a starting point. VAT is usually the main tax on a new-build purchase, but the final budget also depends on AJD, professional services and running costs. Confirm the figures for the specific development and the current legislation in the region.
Frequently asked questions
Is it worth hiring an independent lawyer?
Yes. Having the documents and contracts checked protects the buyer’s interests.
Are the rules the same throughout Spain?
No. Some procedures and taxes depend on the region and municipality.
How much VAT is payable on a new-build home?
As a general rule, the first supply of a new-build home by a developer is subject to 10% VAT (IVA). There are exceptions, including certain categories of protected housing. On a property priced at €250,000, VAT alone at 10% is €25,000.
Sources and references
For information only: not legal or tax advice, or a guarantee of returns. Confirm the terms of your transaction with an independent professional.
