In brief:

How much tax do you pay on a new-build property in Spain?

In short, when buying a new property directly from a developer – obra nueva, meaning the first transfer of ownership – the buyer pays two mandatory taxes.

The first is VAT, known in Spain as IVA. The second is stamp duty on notarised legal documents, AJD (Actos Jurídicos Documentados). Together, they usually amount to around 10.5%–12% of the property price, depending on the region.

On top of that come several expenses that are not technically taxes but still form part of the purchase budget: notary fees, registration with the Land Registry, gestoría fees – essentially administrative support for handling the paperwork – and, if you are using a mortgage, the bank valuation of the property.

Overall, when buying a new-build property, it is sensible to budget an additional 12%–15% on top of the price stated in the purchase agreement.

That may sound substantial. However, transfer tax on resale property, ITP, can reach 10%–11% in some regions, so buying new does not necessarily work out more expensive overall – particularly once you take into account the potential savings on renovation and ageing installations that may need to be replaced shortly after buying an older home.

Do you always pay VAT on a new-build property in Spain?

Yes. When a developer sells a property for the first time, the transaction is subject to VAT. This is a state-level tax and follows the same general rules across mainland Spain and the Balearic Islands. The buyer pays it directly to the developer together with the purchase price rather than making a separate payment to the tax authorities.

There is, however, an important distinction between new-build and resale property.

If the home is no longer considered a first transfer, IVA does not apply. Instead, the transaction is normally subject to a different tax, ITP, which is set at regional level. IVA and ITP are mutually exclusive – you do not pay both on the same property purchase.

For a broader overview of the total acquisition budget, see our guide to costs and taxes when buying property in Spain.

VAT rates on property in Spain in 2026

The standard VAT rate in 2026 is 10% of the purchase price stated in the contract. This applies to the vast majority of new-build residential property across mainland Spain and the Balearic Islands, from the Costa Blanca to Madrid.

Unlike AJD, IVA is not set by Spain’s autonomous communities, so regional governments cannot independently change the standard rate.

There are, however, two important exceptions to keep in mind.

The first is the Canary Islands. Instead of IVA, the islands apply their own indirect tax, IGIC (Impuesto General Indirecto Canario). For new residential property, the rate referred to here is 7%. Although it is technically a different tax, it serves the same role as IVA for property purchases in the Canary Islands. So if you are considering a property in Tenerife or Gran Canaria, this is the figure to use rather than the 10% rate applicable on the mainland.

The second exception relates not to location but to the type of property. Certain categories of officially protected housing – VPO específico, régimen especial – may qualify for a reduced 4% rate.

This relief is subject to strict conditions. The development must have the appropriate official classification, the sale price is legally restricted, and the property is generally intended as a primary residence rather than an investment or holiday home. For international buyers looking at mainstream or resort property, this category will rarely be relevant, but it is useful to understand that the reduced rate exists.

How 10% VAT works: an example

A headline figure such as “10% VAT” can feel abstract until you put it into numbers. The calculation itself is straightforward: it is 10% of the price stated in the purchase agreement.

Example: A property costs €250,000. VAT comes to €25,000, bringing the amount payable to the developer to €275,000 before notary and registration costs. This amount also covers a parking space where it is sold together with the property – up to two spaces per dwelling – and a storage room where it forms part of the same transaction.

The buyer does not normally make a separate VAT payment to the tax authority. Instead, IVA is paid to the developer, who is responsible for transferring it to the state. From the buyer’s perspective, this makes the process relatively straightforward: the tax forms part of the transaction settlement.

What about AJD stamp duty?

This is where location starts to make a real difference.

Unlike IVA, AJD is a regional tax, and each autonomous community sets its own rate. The range is significant: from 0.5% in Navarra and the Basque Country to 1.5% in Catalonia and Valencia. Madrid sits somewhere in between at 0.75%, while the rate in Andalusia is 1.2%. In the Canary Islands, AJD is also relatively low at 0.75%.

The tax is calculated on the price stated in the purchase agreement rather than the cadastral value.

Example: Using the same €250,000 property, the total changes depending on where you buy:

• Madrid, at 0.75%: AJD is €1,875, bringing the total VAT and AJD bill to €26,875 on top of the purchase price;
• Andalusia, at 1.2%: AJD is €3,000, bringing the total to €28,000;
• Catalonia or Valencia, at 1.5%: AJD is €3,750, bringing the total to €28,750.

The difference in AJD alone can therefore approach €2,000 on a mid-priced property, while the gap becomes considerably larger for high-value real estate.

Many regions also offer reduced rates – in some cases as low as 0.1% – for eligible buyers such as younger purchasers, large families or people with disabilities, provided the property is being acquired as their main residence. Any potential entitlement to a reduced rate should be checked before signing rather than after the transaction has been completed.

What other costs should you budget for?

Notary fees, registration costs and gestoría services are not taxes, strictly speaking, but leaving them out of your budget would be unrealistic. Together, they amount to approximately another 1%–2% of the property price.

If you are financing the purchase, there may also be costs associated with the bank valuation and insurance. Since 2019, the banking costs of formally setting up the mortgage – including the stamp duty applicable specifically to the mortgage deed rather than the property purchase itself – are borne by the bank rather than the buyer.

A practical budgeting formula for a new-build purchase in Spain in 2026 therefore looks like this: the property price, plus 10% IVA – or 7% IGIC in the Canary Islands – plus AJD of between 0.5% and 1.5% depending on the region, plus around 1%–2% for the notary, registration and administrative formalities.

That brings the overall additional budget back to the 12%–15% range mentioned at the beginning.

At Alegría, we calculate these figures with our clients every day, and we know that taxes and transaction costs can look more intimidating on paper than they feel once everything has been clearly broken down.

Our aim is to make sure that by the time you sign, there are no lingering questions about how much more you may still need to pay. We calculate the overall purchase cost in advance, explain why AJD is higher in one region and lower in another, and help you assess a property with the full transaction budget in mind.

If you are considering a new-build property in Spain, get in touch. We can go through the figures with you clearly and transparently, without unpleasant surprises hidden in the small print.

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