New Build vs. Resale Property in Spain: Differences in Taxes and Procedures for a €750,000 Purchase
Buying a house in Spain involves understanding the differences in taxes and legal procedures between purchasing a new build and a resale (second-hand) property. These differences can significantly impact the total cost of the purchase.
Below, as example, we analyze the taxes and associated costs when buying a property in Andalusia with a purchase price of €750,000.
1. Taxes When Buying a Property in Spain
A. New Build Property
If you purchase a brand-new property directly from a developer, the applicable taxes are:
- VAT (Value Added Tax / IVA): 10 % of the purchase price.
- Stamp Duty (Actos Jurídicos Documentados - AJD): 1.2 % in Andalusia.
Example for a €750,000 purchase in Andalusia:
- VAT (10%): €75,000
- Stamp Duty (1.2%): €9,000
- Total Taxes: €84,000
B. Resale Property (Second-Hand Home)
For a pre-owned property, instead of VAT, the buyer pays the Property Transfer Tax (Impuesto de Transmisiones Patrimoniales - ITP), which in Andalusia is 7%.
Example for a €750,000 purchase in Andalusia with 7% ITP:
- ITP (7%): €52,500
- Total Taxes: €52,500
Tax Comparison:
| Property Type | Main Tax | Applicable Rate | Cost on €750,000 Purchase |
|---|---|---|---|
| New Build | VAT | 10% | €75,000 |
| New Build | Stamp Duty (AJD) | 1.2% | €9,000 |
| Resale Property | Transfer Tax (ITP) | 7% | €52,500 |
2. Additional Costs Related to the Purchase
Besides taxes, there are other costs associated with both options:
| Expense | New Build Property | Resale Property |
|---|---|---|
| Notary Fees | 0.5% | 0.5% |
| Property Registry Fees | 0,1 - 0.2% | 0,1 - 0.2% |
| Administrative Fees (Gestoría) | €300 - €1,000 | €300 - €1,000 |
| Legal Fees | 1% of the purchase price (€7,500) | 1% of the purchase price (€7,500) |
| Mortgage Costs (if applicable) | Bank fees | Bank fees |
3. Differences in the Buying Process
A. Buying a New Build Property
- Initial Reservation with the developer.
- Purchase Agreement with an upfront payment (usually starting 30-40%).
- Final Deed Signing & Key Handover when construction is completed.
Key Points:
- Payments may be required in installments throughout construction.
- Includes a 10-year structural warranty.
B. Buying a Resale Property
- Down Payment & Earnest Money Agreement (typically 10% deposit).
- Legal Due Diligence to verify no outstanding debts or liens.
- Final Deed Signing at the Notary & Key Handover.
Key Points:
- The property is already built and can be occupied immediately.
- May require renovations but offers better locations in established areas.
Thinking About Buying Property in Spain?
At Landcross Partners, we specialize in assisting U.S. citizens and international buyers with the purchase process in Spain. From selecting the right property to handling legal and tax matters, our own team, or our partners, ensure a smooth and hassle-free experience.
