CostsCosta del SolTaxes

The Real Costs of Buying a Property on the Costa del Sol

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Taxes on Buying Property in Spain

When purchasing real estate on the Costa del Sol, the biggest cost after the property price is taxes. These depend on whether you buy a resale home or a new-build.

  • Resale Properties: Pay Property Transfer Tax (ITP), which ranges from 7% to 10% of the purchase price, depending on the property value.
  • New-Build Properties: Pay 10% VAT (IVA) plus 1.2% stamp duty (AJD). 👉 Tip: Always calculate at least 10–12% extra on top of the property price to cover taxes and fees.

Notary and Land Registry Fees

In Spain, all property purchases must be formalised in front of a notary and registered.

  • Notary fees: €600–€1,000
  • Land Registry fees: €400–€900 These depend on the property’s value and complexity of the transaction.

Hiring a lawyer is highly recommended when buying property on the Costa del Sol. They handle due diligence, contracts, and ensure the property is debt-free. Legal fees: Around 1%–1.5% of the purchase price, plus VAT

Mortgage Costs (If Financing)

If you need a Spanish mortgage, expect extra costs:

  • Bank valuation: €400–€600
  • Mortgage arrangement fee: 0.5%–1% of the loan
  • Stamp duty on mortgage deed: Around 1.2%

Other Costs and Hidden Fees

Aside from taxes and legal requirements, there are ongoing and optional costs:

  • Property survey: €500–€1,500 (recommended)
  • Bank account & transfer fees: €200–€500
  • Utility connections: €300–€600
  • Community fees: €50–€400 per month (depends on facilities like pools, gyms, and security)
  • Annual property taxes (IBI): Usually 0.3%–1.3% of cadastral value
  • Waste collection tax (basura): Around €100–€200 per year

Example: Costs of Buying a €300,000 Property on the Costa del Sol

Foreign buyers often overlook the tax side of property ownership. You may be liable for:

  • Annual property tax (IBI).
  • Wealth tax in certain cases.
  • Capital gains tax on future sales.
  • Inheritance tax for heirs. In addition, post-Brexit buyers from the UK face tighter residency rules, impacting how often they can use the property and whether rental income is taxed at higher non-resident rates.

Example: Costs of Buying a €300,000 Property on the Costa del Sol

Property Transfer Tax (7%): €21,000

  • Notary & Registry: €1,200
  • Legal Fees: €3,600
  • Miscellaneous: €1,500 ➡️ Total costs: ~€27,000 ➡️ Final purchase price: €327,000

FAQs About Buying Property on the Costa del Sol

  1. How much are closing costs in Spain? Expect to pay 10–13% of the property price in closing costs.
  2. Do foreigners pay more when buying property in Spain? No, but foreign buyers must obtain an NIE (Número de Identidad de Extranjero) before purchase.
  3. Is it cheaper to buy a new-build or resale property? Resale properties often have lower taxes (7–10% ITP) compared to 10% VAT on new-builds.
  4. Are there ongoing property taxes in Spain? Yes, you’ll need to pay IBI (annual property tax), community fees, and waste collection fees.

Final Thoughts

Buying a property on the Costa del Sol is an exciting investment, but it’s essential to budget for more than just the asking price. With taxes, notary fees, legal costs, and ongoing expenses, the total outlay can add 10–13% to the purchase price. By working with a reputable lawyer and real estate agent, you’ll avoid surprises and enjoy a smooth buying process on Spain’s beautiful southern coast.