Living in Estepona: The New-Build Boom

Once a quiet fishing town, Estepona has become one of the Costa del Sol’s most talked-about destinations, and living in Estepona increasingly means living in a brand-new home. A decade of urban regeneration has turned the old town into an open-air gallery of murals and flower-filled streets, while the surrounding hillsides and beachfront fill with contemporary developments. This guide explains the new-build boom and, just as importantly, the taxes, paperwork and practicalities every foreign buyer needs to understand before signing.

Why Estepona, and why now

Estepona sits in the west of Malaga province, roughly 80 km from Malaga Airport and around 45 km from Gibraltar Airport, with Marbella a short drive east along the A-7.⁹ The municipality is home to about 79,621 residents as of January 2025 and enjoys more than 325 days of sunshine a year.⁹ Nicknamed the “Garden of the Costa del Sol”, the town has invested heavily in beautification: over 40 artistic murals, restored plazas and subtropical planting.⁹ Golf (including the celebrated Finca Cortesin), beaches and the marina round out the lifestyle appeal.⁹

That lifestyle has driven demand for modern housing, and Estepona has responded with a wave of off-plan and turnkey developments. Compared with more saturated neighbours, buyers are drawn by newer stock, larger terraces and, historically, more competitive pricing, though asking prices have risen sharply as the town’s profile has grown.

Buying new-build: the taxes you actually pay

The single most important thing foreign buyers get wrong is confusing new-build and resale taxation. They are completely different.

New-build (off-plan or first sale)

• IVA (VAT) at 10% of the price, the standard rate for new residential property in Spain (4% only for officially protected VPO housing).²
• AJD (Actos Juridicos Documentados) at 1.2% in Andalucia, the stamp duty charged on the deed of a new-build purchase.¹

So the headline tax load on a new-build home in Estepona is 10% IVA + 1.2% AJD = 11.2% of the purchase price. New-build buyers do not pay ITP.

Resale (second-hand) property

If you buy a resale home instead, you pay ITP (Transmisiones Patrimoniales) at the general Andalusian rate of 7%, and no IVA or AJD on the purchase itself.¹⁵ Reduced ITP rates exist (for example 6% for a habitual residence up to 150,000 EUR, or 3.5% for buyers under 35 and certain protected groups on a habitual residence within value limits), but they rarely apply to foreign second-home buyers.⁵⁶ Note that the tax base is the higher of the price paid or the Catastro reference value (valor de referencia), so an under-priced deed will not reduce the bill.⁶

On top of tax, budget roughly 1% to 2% more for notary, Land Registry and legal fees. A realistic rule of thumb is to add around 12% to 14% to a new-build price for all costs combined.

Off-plan protection: deposits and guarantees

Buying off-plan means paying in stages before the home exists, so Spanish law protects your deposits. Historically known as the Ley 57/68, this protection now sits within the Ley de Ordenacion de la Edificacion: the developer must secure every stage payment with a bank guarantee (aval bancario) or insurance policy, held in a special account, so your money is returned with interest if the property is not delivered. Always confirm in writing that these guarantees are in place before transferring any payment, and use an independent lawyer, never the developer’s.

The NIE and opening the door

Every foreign buyer needs an NIE (Numero de Identidad de Extranjero), the tax identification number required to purchase property, open a Spanish bank account and pay taxes. You can apply at a Spanish consulate in your home country or in Spain by appointment, or grant power of attorney to your lawyer to obtain it for you. It has no expiry as an identification number and is separate from any residency permit.

Mortgages for non-residents

Spanish banks lend to non-residents, but on tighter terms. In 2026, non-resident loan-to-value (LTV) typically ranges from 60% to 70% for EU buyers and around 50% to 60% for non-EU buyers (including UK nationals post-Brexit), with the higher end reserved for strong financial profiles.⁸ Crucially, the LTV is applied to the lower of the bank’s valuation or the purchase price, so you cover the tax and fees, plus the deposit, from your own funds.⁸ Non-euro income can reduce the maximum offered because of currency risk.⁸

Ongoing costs once you own

• IBI (Impuesto sobre Bienes Inmuebles): an annual municipal property tax based on the cadastral value, set and collected by Estepona town hall. Rates vary by municipality, so ask the agent or town hall for the exact figure on your specific property.
• Community fees: most new developments have shared pools, gardens and security, funded by monthly community-of-owners charges.
• Rubbish (basura) and utilities: billed locally.
• Plusvalia municipal: a local tax on the increase in land value, normally paid by the seller when a property changes hands.

Non-resident income tax: Modelo 210

This is the ongoing obligation most foreign owners overlook. As a non-resident owning property in Spain, you must file the IRNR (Impuesto sobre la Renta de no Residentes) using Modelo 210, whether or not you rent the home out.²³

• If you do not rent it out, Spain taxes a deemed “imputed income” based on the cadastral value (commonly 1.1% or 2% of that value), then applies the IRNR rate.³
• If you rent it out, you declare the actual rental income.³

The IRNR rate is 19% for residents of the EU, EEA, Iceland, Liechtenstein and Norway, and 24% for non-EU residents (UK nationals now fall in the 24% band).³¹⁰ EU/EEA landlords may deduct expenses; non-EU landlords generally cannot.³ Related reading: see our guides on non-resident tax and on renting out a Costa del Sol home.

Selling later: the 3% retention

When a non-resident sells a Spanish property, the buyer must withhold 3% of the sale price and pay it to the Agencia Tributaria (Modelo 211) as an advance against the seller’s tax.⁴ The seller then files Modelo 210 to settle the actual capital gains tax, a flat 19% on the gain for EU/EEA sellers (24% otherwise), and either pays the balance or reclaims any excess withheld.⁴ Factor this in when you plan an eventual exit.

Can buying get you residency? Not any more

The so-called Golden Visa, which granted residency to non-EU buyers investing 500,000 EUR or more in property, was abolished for new applications on 3 April 2025 under Organic Law 1/2025.⁷ Buying property in Estepona no longer provides a route to Spanish residency. Non-EU nationals who want to live here should look instead at the Non-Lucrative Visa (for those with sufficient passive income or savings) or the Digital Nomad Visa (for remote workers and freelancers with foreign income).⁷ EU citizens retain freedom of movement and simply register as residents.

Schools and healthcare

Estepona and the wider western Costa del Sol are well served by international schools teaching British, IB and other curricula, which is a major draw for relocating families; confirm current admissions directly with each school. Healthcare combines Spain’s public system (accessible to legal residents who contribute or hold cover) with a strong private sector and international clinics along the coast. Residents from your home country should check whether a bilateral healthcare arrangement or private insurance is required for your visa.

The bottom line

Estepona offers a rare mix: an authentic, walkable Andalusian town, a serious pipeline of modern new-build homes, and a lifestyle built around sun, sea and golf. The maths is manageable once you know it: budget around 11.2% in tax on a new-build, add fees, plan for annual IBI and Modelo 210, and treat residency and property as two separate decisions. With an independent lawyer and verified off-plan guarantees, the new-build boom can be an opportunity rather than a risk. For next steps, see our related guides on buying off-plan safely, non-resident taxes in Spain, and Spanish mortgages for foreign buyers.