Spanish property costs and taxes: VAT, ITP, IBI and community fees

Why you should calculate costs upfront

The purchase price of a Spanish property is only half the equation. Taxes and fees at purchase add 10-13% on top, and ownership brings recurring annual costs. Buyers who budget for both see their true net yield.

Taxes payable at purchase

New-build: 10% VAT (IVA) plus 1.2% AJD

For new-build property the developer charges 10% VAT (IVA) on the purchase price, plus stamp duty (AJD) at 1.2% in Andalusia. On a 300,000-euro apartment that is 30,000 euros VAT and 3,600 euros AJD.

Resale: ITP transfer tax

Resale property carries no VAT. Instead you pay ITP (Impuesto de Transmisiones Patrimoniales), a flat 7% of the purchase price in Andalusia. AJD does not apply to resales.

Other purchase costs

• •Notary fee: approx. 800-1,500 euros
• •Land registry: approx. 400-800 euros
• •Legal fees: 1-1.5% of purchase price
• •Mortgage costs if financing: valuation approx. 400 euros, arrangement fee 0-1%

Total: roughly 12-13% of the price for new-builds, 9-10% for resales.

Recurring annual costs

IBI: the local property tax

IBI (Impuesto sobre Bienes Inmuebles) is the annual municipal property tax, based on the cadastral value (valor catastral), which is typically well below market price. Rates on the Costa del Sol run 0.4-1.1% of cadastral value, so a 300,000-euro apartment usually pays 350-700 euros per year, billed once or in two instalments and payable by direct debit.

Comunidad: the community fee

The comunidad fee contributes to the owners’ community’s expenses. Its contents depend on the building or development’s budget and services; clarify whether a quoted amount is an estimate or an approved charge.

For the actual apartment, request the budget period, applied allocation rules, service list and treatment of reserves and one-off contributions. A general monthly range does not establish the property’s charge.

The guide to community fees for Spanish new-builds explains how to check the comunidad charge with a document checklist and a calculation with stated assumptions.

Utilities

Water, electricity and internet for a two-bedroom apartment average 90-160 euros per month, dropping to a fraction of that when empty, since standing charges continue. Air conditioning and pool heating can push summer and winter bills noticeably higher.

Refuse charge (basura)

The municipal waste collection charge runs 90-200 euros per year depending on the town and is billed separately from IBI.

Property insurance

Apartment insurance costs 200-400 euros per year; a villa runs 500-1,200 euros. Lenders require it when there is a mortgage.

Taxes during ownership

If you rent the property out

As an EU citizen you pay 19% tax on Spanish rental income and can deduct running costs (comunidad, IBI, insurance, management fees, depreciation, repairs) from the taxable base. Quarterly filing via Modelo 210 is required.

If you keep it for personal use: imputed income tax

Non-residents who keep a property for their own use still pay a nominal tax: Spain treats 1.1-2% of the cadastral value as imputed income and taxes it at 19%. On a 150,000-euro cadastral value that is roughly 310 euros per year.

Wealth tax (Impuesto sobre el Patrimonio)

Andalusia applies a near-total rebate on wealth tax, so most buyers pay nothing. The national solidarity tax only applies to portfolios above 3 million euros.

Worked example: 300,000-euro new-build in Estepona

• •One-off costs: VAT 30,000 euros, AJD 3,600 euros, notary and registry approx. 1,800 euros, legal approx. 3,600 euros. Total approx. 39,000 euros.
• •Annual costs: IBI approx. 500 euros, comunidad approx. 1,680 euros (140/month), insurance approx. 300 euros, refuse approx. 140 euros, utilities approx. 1,200 euros. Total approx. 3,820 euros.

If you rent it out, add management fees (15-25% of gross revenue for short-term lets), though rental income covers these.

What to check

A nota simple helps check registered rights and charges. Separately request the community debt certificate and current IBI evidence; the extract alone is not a comprehensive certificate that all debts have been paid. The nota simple checklist for new-build properties explains how to match identifiers and which supporting documents are needed.

Next step

Request a free consultation: we get in touch within 24 hours to talk through the full cost and yield picture for your budget.