ITP, IVA and the Real Cost of Buying Property in Spain

You’ve found the property. You’ve agreed the price. And then someone mentions “ITP.” Or “IVA.” Or “AJD.” Suddenly the deal you thought was €500,000 looks more like €560,000, and nobody seems to give you a straight answer about why. This guide fixes that. Here’s exactly what buying property in Spain really costs in 2026 — every tax, every fee, every line item — so you walk into the notary’s office with zero surprises.

Spain is not an expensive country to buy in. But it is a country where the headline price is just the start of the conversation. The good news: once you understand how ITP and IVA work, the rest of the numbers fall into place. The bad news: most buyers find out about these costs three weeks before signing, when there’s no time to optimize anything.

Let’s make sure that’s not you.

ITP vs IVA: the one decision that drives everything

Before we talk numbers, you need to understand the fork in the road. In Spain, the property tax you pay at purchase depends on one single question: is the property a resale (second-hand) or a brand-new build?

• Resale property (anyone has lived in it before, even one day) → you pay ITP.
• New build sold directly by the developer (first transmission) → you pay IVA + AJD.

It’s an either/or. You never pay both. And the difference between them can swing your total cost by 2–4 percentage points depending on the region. That’s not loose change on a €600,000 villa.

The “new build vs resale” question isn’t just about taste or amenities. It’s a tax decision that quietly reshapes your budget.

ITP explained: the resale property tax

ITP stands for Impuesto sobre Transmisiones Patrimoniales — the property transfer tax. It’s paid by the buyer, not the seller, and the rate is set by each autonomous community (each region sets its own). That’s why the same property bought in Madrid versus Valencia versus the Balearics can cost wildly different amounts to close.

Here’s how ITP looks across the main regions in 2026 for standard residential resales:

• Madrid: 6% — the cheapest mainland option, by design.
• Andalusia (Costa del Sol, Málaga, Marbella): 7%.
• Murcia: 8%.
• Canary Islands: 6.5%.
• Valencia Community (Alicante, Costa Blanca, Valencia city): 10% standard; 11% on tranches above certain thresholds.
• Catalonia: 10% up to €1M; 11% above.
• Balearic Islands (Mallorca, Ibiza, Menorca): progressive — 8% to 13% depending on price brackets.
• Basque Country / Navarra: 4–7%, often the most favorable for primary residences.

Real example: a €700,000 resale in Marbella costs you €49,000 in ITP. The same property bought in Madrid? €42,000. In Mallorca above the top bracket? Up to €91,000. Same villa, three completely different tax bills.

How ITP is calculated

ITP is applied to the “valor de referencia” — the reference value calculated by the Spanish cadastre — or the declared sale price, whichever is higher. This changed in 2022 and trips up plenty of buyers in 2026.

If you negotiate hard and buy at €450,000 a property the cadastre values at €510,000, you’ll pay ITP on the €510,000. The savings on price don’t translate to savings on tax. You can challenge the valor de referencia, but the burden of proof is on you.

IVA + AJD: the new-build combo

If you’re buying a brand-new property directly from a developer, the tax mix changes:

• IVA (VAT): 10% on residential property nationwide. 4% if it qualifies as VPO (subsidized housing — rare in international buyer scenarios). 21% on commercial property and plots of land.
• AJD (Actos Jurídicos Documentados / stamp duty): 0.5% to 1.5%, set by each region.

So a new-build apartment at €400,000 in Valencia: €40,000 in IVA, plus €6,000 in AJD (Valencia’s AJD is 1.5%). Total tax bill on the purchase: €46,000.

Compare that to a resale at the same price in Valencia: €40,000 in ITP, no AJD. A €6,000 difference in favor of resale. That’s not insignificant, and it’s one of the reasons developers often have to offer extra perks (kitchen upgrades, parking, terrace finishes) to compete with the resale market.

When does new build get cheaper than resale?

In regions with high ITP, new-build can actually win. In the Balearics for example, a high-value resale can hit 13% ITP. A new-build of the same value comes in at 10% IVA + 1.2% AJD = 11.2%. That’s a 1.8-point spread in favor of the developer’s product — sometimes €30,000+ on a single transaction.

This is the kind of arbitrage that good buyer’s agents flag early. Most buyers don’t, because they’re focused on aesthetics and floor plans, not regional tax tables.

The “extra” costs no listing ever shows you

Even after ITP or IVA+AJD, you’re not done. Here’s the rest of the closing cost stack you need to plan for in 2026:

Notary fees

Notary fees in Spain are regulated by official fee schedules (aranceles) and depend on the property value, the complexity of the deed, and whether a mortgage is involved. Typical range: 0.2% to 0.5% of the purchase price. Realistic ballpark on a €500,000 purchase: €700 to €1,400.

Land Registry fees

To make the property officially yours in the eyes of the law, the deed needs to be inscribed at the Registro de la Propiedad. Fees are also regulated: 0.1% to 0.25% of the price. Same €500,000 example: €400 to €1,000.

Legal fees

Optional in theory, mandatory in practice if you’re a foreign buyer. A competent abogado will run searches, check for hidden debts, verify the urban planning status, review the contract, and represent you at signing. Typical cost: 1% to 1.5% of the purchase price, with a minimum that varies by firm (often €2,500–€3,500).

Property valuation (only if you take a mortgage)

The bank’s mandatory appraisal: €300 to €700 depending on size and location.

Mortgage opening costs (only if you take a mortgage)

Since 2019, most mortgage-related costs (notary, registry, gestoría, AJD on the mortgage deed) are paid by the bank. The buyer typically only pays the appraisal and, sometimes, a commission of up to 1% of the loan — though plenty of banks now waive this in competition.

Gestoría and miscellaneous

A gestoría handles paperwork, registrations, and tax filings. €300 to €600 all in. Small but real.

The 2026 closing cost cheat sheet

Here’s the bottom-line rule of thumb that survives every conversation:

• Resale property: budget 10% to 13% on top of the price.
• New build: budget 11% to 14% on top of the price.
• High-value property in Balearics or Catalonia: closer to 14–15%.
• Madrid (resale, mid-range): as low as 9–10% if you’re efficient.

Example: €600,000 resale villa in Marbella with 60% mortgage financing.

• ITP (7%): €42,000
• Notary: ~€1,200
• Land Registry: ~€800
• Legal fees (1.2%): €7,200
• Mortgage appraisal: €500
• Gestoría: €450
• Total closing costs: ~€52,150 (≈ 8.7% of price + ITP). Plus the down payment.

So on this villa, you need €240,000 down payment + €52,150 closing costs ≈ €292,150 in liquid funds before the keys are yours.

The taxes that hit after the purchase

ITP, IVA and AJD are one-time hits. But Spanish property comes with ongoing taxes that often surprise foreign owners. Quick overview so you don’t get caught later:

• IBI (Impuesto sobre Bienes Inmuebles): annual property tax, paid to the town hall. Typically 0.4% to 1.1% of the cadastral value (which is far below market value). Usually €400–€2,500/year on average homes.
• Basura: municipal waste collection fee. €100–€300/year.
• Community fees: if you’re in an urbanization or building. €600–€5,000+/year depending on amenities.
• Non-resident income tax (IRNR): even if you never rent it out, non-residents owe imputed income tax. Roughly 19–24% of 1.1% of the cadastral value. Small but mandatory.
• Wealth tax / Solidarity tax: only triggers above significant thresholds (€700k–€3M+ depending on region). Not all owners pay this.

How to legally reduce your tax bill at purchase

Most of these taxes are non-negotiable. But there are levers, and a few of them can save you serious money:

Choose your region strategically

If your priorities are flexible — say, you’re deciding between a Costa del Sol property and one in Murcia — the 1-point ITP difference equals real cash. On a €800,000 home that’s €8,000.

Check whether you qualify for reduced rates

Several regions have reduced ITP for:

• Young buyers (typically under 35) buying a primary residence.
• Large families.
• Disabled buyers.
• Properties below certain price thresholds.

These reductions rarely apply to international buyers acquiring a second home, but if you’re relocating to Spain as a primary resident, you might catch a 2–4% saving in the right region.

Negotiate the “valor de referencia”

If the cadastral reference value is clearly above market for your specific property, you can pay ITP on the lower declared price and challenge the assessment afterward. Done correctly with a tasación (appraisal) supporting your number, this can recover the difference. It requires legal support but it’s a real strategy.

Buy through the right structure (when it makes sense)

For high-value investment purchases, a Spanish SL or non-resident corporate structure can change the tax math — particularly on rental income, capital gains and inheritance. Not always worth it for personal use properties, but worth modelling for portfolios above €1.5M.

Mistakes that cost real money

After years of guiding international buyers through Spanish closings, here are the patterns we keep seeing — and they’re expensive:

• Budgeting based on the listing price alone. The 10–14% buffer isn’t optional. Build it in from day one.
• Underestimating the cadastral reference value. If the cadastre values the property higher than your negotiated price, your tax bill goes up, not down.
• Skipping the lawyer. Saving €4,000 in legal fees to inherit €30,000 of hidden municipal debt is not a win.
• Forgetting AJD on new builds. “IVA is 10%” — yes, but that’s not the full tax. AJD adds another 0.5–1.5%.
• Wiring funds without an FX plan. A 1.5% adverse currency move on a €700,000 purchase is €10,500 — more than your registry and notary combined.
• Ignoring ongoing taxes. Plan for the annual cost of ownership before signing, not after.

So what does it really cost? A worked example

Let’s put it all together. American buyer, €750,000 resale apartment in central Valencia, financed at 60% LTV:

• Purchase price: €750,000
• ITP (10%): €75,000
• Notary: ~€1,500
• Land registry: ~€900
• Legal fees (1.2%): €9,000
• Mortgage appraisal: €550
• Gestoría: €500
• Total closing costs: ~€87,450 (11.7% of price)
• Down payment (40%): €300,000
• Cash needed at closing: ≈ €387,450

Same apartment, all cash, no mortgage: cash needed at closing = €750,000 + €86,900 = ~€836,900.

Same apartment, but a new-build in the same district: ITP replaced by IVA (10%) + AJD (1.5%) = €86,250 in lieu of €75,000 ITP. Total closing costs jump to ~€98,700.

That’s the difference reality vs the listing makes.