New-Build Purchase Tax in Spain: 10% VAT (IVA) and AJD Stamp Duty

New-build purchase tax in Spain: how 10% IVA and AJD stamp duty work

When a foreign buyer purchases a brand-new home from the developer on the Costa del Sol, the two headline purchase taxes are IVA (Impuesto sobre el Valor Añadido, Spanish VAT) at 10% and AJD (Impuesto sobre Actos Jurídicos Documentados, stamp duty on notarised legal documents), charged at 1.2% in Andalusia. This guide explains both taxes, who collects them, when you pay, and how they fit into the total cost of buying a new-build property anywhere in Málaga province.

The key distinction to understand up front: a new-build (obra nueva) bought directly from the promoter is taxed with IVA plus AJD. A resale (second-hand) home is instead taxed with ITP (Impuesto sobre Transmisiones Patrimoniales). You never pay both IVA and ITP on the same purchase. This guide covers the new-build route; see our related guide on resale property transfer tax (ITP) in Andalusia for second-hand homes.

IVA at 10%: the VAT on a new-build home

The first delivery of a completed dwelling by the developer is subject to IVA. Under Spanish VAT rules, the delivery of buildings intended mainly for housing is taxed at the reduced rate of 10%. ¹² IVA is a national tax collected by the Agencia Tributaria (the Spanish state tax agency), so the rate is the same across the whole of mainland Spain, not just Andalusia.

A few practical points foreign buyers should know:

• Garage and storage. Up to two parking spaces and a storeroom (trastero) that are transferred together with the home in the same deed also qualify for the 10% rate. Parking spaces bought separately, or a third space, are taxed at the standard 21% IVA. ²
• Subsidised housing (VPO). Officially protected housing under the special regime can qualify for a reduced 4% IVA, but these homes carry eligibility and price caps and rarely apply to the free-market resort stock most foreign buyers purchase. ²
• Plots and commercial units. Building land and commercial premises are taxed at 21% IVA, not 10%.

You pay the IVA to the developer as part of the purchase payments (typically staged deposits during construction, with the balance at completion). The developer then remits it to the Agencia Tributaria.

AJD stamp duty at 1.2% in Andalusia

Because a new-build purchase is subject to IVA rather than ITP, the notarised deed of sale also triggers AJD, the stamp duty on documented legal acts. AJD is a tax ceded to the autonomous communities, so the rate is set by the Junta de Andalucía. The general rate in Andalusia for the first copy of notarial deeds documenting property transactions is 1.2% of the declared price. ³⁴

Andalusia does offer reduced AJD rates in specific personal circumstances (for example lower rates for buyers under 35 purchasing a habitual residence below set price limits, for large families, and for buyers with a disability). These reliefs generally require the home to be your permanent residence and are subject to price ceilings, so most non-resident holiday-home and investment buyers pay the standard 1.2%. ³⁴ Always confirm your eligibility with your lawyer before completion.

AJD is settled after signing the deed, normally by your lawyer or gestoría, and paid to the Junta de Andalucía.

Total purchase tax: what 10% IVA plus 1.2% AJD really adds up to

Combined, the two new-build purchase taxes come to roughly 11.2% of the price for a standard free-market home in Andalusia. On top of the taxes you should budget for transaction costs that are not taxes: notary fees, Land Registry (Registro de la Propiedad) fees, and legal fees.

Worked example. On a new-build apartment priced at 350,000€: IVA at 10% is 35,000€ and AJD at 1.2% is 4,200€, giving 39,200€ in purchase taxes alone. Adding notary, registry and legal costs, a realistic all-in budget is around 12% to 13% above the headline price. If you buy with a Spanish mortgage there are additional financing costs, though under current law the borrower does not pay the AJD on the mortgage deed itself (the lender does).

What you need before you can complete

Every foreign buyer needs an NIE (Número de Identidad de Extranjero), the Spanish foreigner identification number, to sign the deed and pay taxes. You can obtain it in Spain or through a Spanish consulate in your home country. Opening a Spanish bank account is also standard practice for paying the developer and setting up utility and tax direct debits. See our related guide on getting an NIE and opening a Spanish bank account.

Financing a new-build as a non-resident

Non-resident buyers are typically offered lower loan-to-value (LTV) mortgages than residents. Spanish banks commonly lend around 60% to 70% of the purchase price (or valuation, whichever is lower) to non-residents, so you should plan to have at least 30% to 40% of the price in cash, plus the full 11.2% tax bill and transaction costs, before applying. ⁵ Buyers from some countries (for example the United States, due to FATCA reporting) may find offers closer to the 60% end. Confirm exact terms with a mortgage broker, as bank criteria change.

Ongoing taxes once you own a new-build

Purchase tax is a one-off, but owning property in Spain as a non-resident creates recurring obligations you should factor into your budget:

IBI (annual property tax)

IBI (Impuesto sobre Bienes Inmuebles) is the annual local property tax, set by each town hall as a percentage of the property’s valor catastral (cadastral value). It is billed once a year and is best set up by direct debit.

Modelo 210 and non-resident income tax (IRNR)

Non-resident owners must file Modelo 210 under the non-resident income tax (IRNR) regime. Two situations arise:

• Imputed income (property empty or for personal use). Even if you never rent it out, Spain taxes a notional income based on the cadastral value: the taxable base is 1.1% of the valor catastral (if the value has been revised in the last ten years) or 2% otherwise. ⁶
• Rental income. If you let the property, you declare the rent received.

The tax rate applied on Modelo 210 is 19% for residents of the EU, Iceland, Norway and Liechtenstein, and 24% for residents of other countries (which, since Brexit, includes the United Kingdom). EU/EEA residents may deduct related expenses from rental income; non-EU residents (including UK and US buyers) are generally taxed on gross rent with no deductions. ⁶ See our related guide on Modelo 210 and non-resident tax explained.

The 3% retention when you eventually sell

Looking ahead to resale: when a non-resident sells a Spanish property, the buyer is legally required to withhold 3% of the price and pay it to the Agencia Tributaria using Modelo 211, as an advance payment against the seller’s capital gains tax under IRNR. ⁷ If your actual tax is lower, you reclaim the difference via Modelo 210; if higher, you top it up. The municipal plusvalía (the local tax on the increase in land value) is also settled on sale and is normally the seller’s cost. See our related guide on capital gains tax and the 3% retention for non-resident sellers.

Common questions foreign buyers get wrong

The single most frequent error is assuming Costa del Sol new-builds are taxed like resales at 7% ITP. They are not: new-builds carry 10% IVA plus 1.2% AJD, a higher combined figure. The second is under-budgeting: the taxes alone are 11.2%, and with fees you should plan for roughly 12% to 13% on top of the price. Finally, remember that owning the home brings annual IBI and Modelo 210 filings, so tax does not stop at completion.

Tax rules and rates change, and personal reliefs depend on your circumstances and country of residence. Use this guide to understand the framework, then confirm your exact position with a Spanish lawyer and tax adviser before you commit.