A Clear and Simple Guide for Buyers and Sellers
When buying or selling property on the Costa del Sol, the price you agree on is only part of the picture. Spain has a clear tax system, but if you’re not familiar with it, costs can come as a surprise.
This guide explains exactly what buyers and sellers pay, why each cost exists, and what to expect in real terms.
BUYER COSTS & TAXES (Costa del Sol)
1. Purchase Taxes (The Main Extra Cost)
This is the biggest additional expense when buying property in Spain. The tax depends on whether the property is new or resale.
Resale Property
- Property Transfer Tax (ITP): 7%
- Paid once at purchase.
- Applies to any property that has been previously owned.
New Build Property
- VAT (IVA): 10%
- Stamp Duty (AJD): 1.2%
- VAT replaces ITP on new properties.
- AJD covers the official registration of the new property deed.
2. Notary & Land Registry Fees
- Roughly 1% of the purchase price
- Minimum around €1,200
- Maximum usually €4,500
These fees cover:
- Signing the public deed at the notary
- Registering you as the legal owner at the Land Registry
They are regulated by law, not randomly set.
3. Lawyer’s Fees
- Typically 1% of the purchase price + 21% VAT
A lawyer handles:
- Legal checks on the property
- Debt verification
- Contract review
- Tax calculations
- Completion at the notary
This is optional in theory, but in practice it’s essential.
4. Utility Contract Setup
- Around €350
- Covers electricity, water, and sometimes gas
- Required even if services were previously connected
5. Administrative & Miscellaneous Costs
These are smaller but unavoidable:
- NIE (Spanish tax number)
- Land Registry certificates
- Power of Attorney (if you’re not present)
- Bank draft or certified payment fees
The total varies depending on your situation and bank.
6. Mortgage-Related Costs (If Financing)
If you take a Spanish mortgage, expect additional costs such as:
- Property valuation
- Bank arrangement fees
- Insurance linked to the mortgage
- Administrative fees
Your bank will provide exact figures. Funds usually need to be in Spain about one week before notary signing.
ONGOING ANNUAL PROPERTY COSTS
Owning property in the Costa del Sol comes with yearly expenses.
Community Fees
- Applies to apartments and gated communities
- Covers shared areas like pools, gardens, lifts, and security
- Cost depends on the development and property size
Utilities
- Electricity, water, and gas
- Fully usage-based
- No fixed amounts—depends on lifestyle and occupancy
Municipal Taxes
- IBI (Property Tax)
- Basura (Waste Collection Fee)
Both are calculated using the cadastral value and local council rates.
Home Insurance
- Not legally required, but strongly recommended
- Mandatory if you have a mortgage
- Protects the property and contents
Annual Tax Declaration
- Required for residents and non-residents
- Depends on rental income and personal tax status
- Best handled by a tax advisor
SELLER COSTS & TAXES (Costa del Sol)
When selling, taxes are applied to your profit, not the sale price. These costs directly affect what you walk away with.
1. Capital Gains Tax (CGT)
CGT applies to the difference between what you paid and what you sell for.
Spanish Resident Sellers
- Taxed under IRPF
- Progressive rates: 19% to 26%
Example
- Bought for €500,000
- Sold for €600,000
- Profit: €100,000
- CGT at 21% → €21,000
Key Advantage for Residents
If the property is your main residence and you reinvest the full sale amount into another main home within 2 years, CGT can be completely avoided, even with short ownership periods.
Non-Resident Sellers
- Flat 19% CGT
- No reinvestment exemptions
Example
- Bought for €400,000
- Sold for €480,000
- Profit: €80,000
- CGT: €15,200
3% Withholding Rule
- Buyer must withhold 3% of the sale price
- Paid directly to the Spanish Tax Agency
- Acts as an advance payment toward CGT
If too much is withheld, the seller must apply for a refund.
2. Plusvalía Municipal (Land Value Tax)
- Local council tax
- Based on the increase in land value only
- Rates vary by municipality
Example
- Property in Marbella held for 5 years
- Moderate land appreciation
- Plusvalía: ~€3,000 (illustrative)
This tax is normally paid by the seller unless agreed otherwise.
3. Additional Seller Costs
- Real estate agency fees (as agreed)
- Legal representation
- Mortgage cancellation fees (if applicable)
QUICK SUMMARY
- Buyers: Budget 10–13% extra on top of the purchase price
- Sellers: Factor in CGT, Plusvalía, and selling fees to calculate real profit
Spanish property costs are predictable once you understand them. The key is knowing them before committing, not after.
