What are my first steps?
It’s important to understand which taxes you need to pay when purchasing property in Spain, as well as the necessary documentation to safeguard your interests.
We recommend working with a single real estate agency while searching for your home on the Costa del Sol. Since agencies work well together, this approach can save you a lot of hassle. The agency will schedule viewings for the properties you’re interested in and tailor their search to your specific needs. They can also suggest additional options through their network of partners and developers. Additionally, real estate agencies on the Costa del Sol don’t charge commission to buyers.
As Costa del Sol offers 150 km With 150 km of coastline stretching between the mountains and the sea, Costa del Sol offers a wide range of areas to explore. Clearly defining the location of your property is a crucial first step in the process. Would you rather be within walking distance of amenities, or is having panoramic views more important to you? Discover your ideal location on our Discover Costa del Sol page.
Your real estate agent will guide you on the average prices in your chosen area and help you find the best option that aligns with both your preferences and budget. When purchasing a resale property, it’s important to note that prices are often negotiable. For the best outcome, we recommend keeping negotiations reasonable and in line with the current market supply and demand. However, the prices of new properties are non-negotiable, as they are fixed and listed in the official price lists provided by the developer.
We often envision our ideal property, wanting it to have everything we’ve dreamed of. However, if we’re working with a budget, it’s important to understand there will always be some compromises. For instance, if your top priorities are sea views, a central location, and a top-floor apartment, you’ll pay a premium for those features in certain areas. Generally, new properties on higher floors with panoramic views, close to amenities or the beach, in well-maintained complexes, tend to be the most expensive. If your budget is fixed, you may need to compromise on one or more features. For example, choosing a different area or adjusting proximity to the beach could offer better value for the same or even better property quality. Clarity is key.
Allow your agent to arrange your schedule. They know the area well and will organize viewings efficiently, avoiding duplicate appointments or properties that are no longer listed. They’ll also check all fees and ensure the properties meet your top criteria. Take the time to view as many properties as needed to feel confident in your decision—this is an important step, and rushing could impact your choice. Once you’ve decided on a property, it’s best to proceed with a reservation deposit quickly to secure it and take it off the market.
The reservation deposit typically ranges from €6,000 to €10,000 and is paid into your lawyer’s account. Once the lawyer receives the funds, they will issue a receipt to the seller and begin the due diligence process, which includes conducting legal checks such as verifying any debts, unpaid taxes, mortgages, or other issues related to the property. At this point, the deposit is refundable. Once the due diligence is complete and all documentation is in order, your lawyer will move forward with signing the private purchase contract (PPC).
At this stage, typically 30% of the property price is transferred to the seller, and a purchase contract is signed outlining the terms of the sale and the dates for completing the transfer at the notary. This amount is non-refundable and commits you to proceed with the property purchase.
The buyer has the right to select a notary office to finalize the purchase and transfer of the property. The notary prepares the title deed, and the sale is completed once the remaining balance of the property price is paid.
Purchase costs when buying a property on Costa del Sol
- VAT (IVA) – 10%;
- Stamp duty (Legal documentation tax) – 1.5%;
- Notary fee charged to prepare the title deed depending on the complexity of the document – between 0.5% and 1%;
- Land registry fee officially records the ownership of the property- between 0.5% and 1%;
Total: between 12.5% and 13.5%
- Transfer tax (Impuesto de Transmisiones Patrimoniales/ITP in Spanish):
- Currently it is 7% for all transactions.
- Stamp duty (Legal documentation tax) – 1.5%;
- Notary fee charged to prepare the title deed depending on the complexity of the document – between 0.5% and 1%.
Total between: 8.5% and 11%.
Other costs for both new and resale properties
Aside of the property purchase taxes set by the Spanish government there could be additional fees for you to consider.
Hiring a lawyer is strongly recommended when purchasing property on the Costa del Sol, especially if you’re a non-resident or a first-time buyer in Spain. The lawyer will assist with all the necessary documentation, including obtaining your NIE number and representing you at the notary. Legal fees typically start from 1%.
If you’re transferring money to Spain from your bank account in your home country, you may face transaction fees, especially when converting from another currency to euros. Using a specialist currency exchange broker when purchasing property can help reduce these bank charges.
Banks also charge for issuing the banker’s draft used to make the payment for the property. This draft is needed when you sign the title deed at the Notary. Check with your bank before you order a banker’s draft to avoid surprises.
The mortgage fee depends on the type of the mortgage and its amount. You can expect around 1% bank fee.
If you are purchasing with a mortgage you will have to pay for the property valuation. This could cost is usually between 300EUR and 500 EUR.
Yearly costs
When purchasing a home or an investment property in Spain it is important to keep in mind the yearly costs. These will be regular payments for the maintenance. Most of the properties on the Costa del Sol are part of closed gated complexes. As a result the law obligates you to pay monthly community fees aside of the standard property taxes.
A local tax applies to the ownership of property in Spain. You will need to pay it irrespective of whether as an owner you are a resident or not. It calculates on the basis of the catastral value set by the town hall. It is an administrative value that is usually lower than the market value. The tax rate goes from 0.4% – 1.1%.
The law obliges owners of a property that is part of any building or residential complex to pay community fees. They will vary depending on the size of gardens, facilities, number of lifts, if there is private security, etc. Community fees normally range between 100 and 500 Euros per month.
Water bills arrive monthly and the amount is according to the consumption. Water bills can range between 50 and 150EUR a month. Electricity is paid once every two months and can range between 100EUR and 350EUR depending on the consumption and size of the property.
Your property insurance will be for contents and damage by fire and water etc. It is mandatory that in communal buildings owners have an insurance.
If you won´t be using the property all year around it is recommended that you install a security alarm system. Depending on the size of the property the prices can start from 50EUR/month.
There is an annual income tax for non-residents who own a property in Spain. It varies according to whether the property is being rented out or not:
- Rented out – if non-residents receive an income in exchange for rent, they must declare this income and pay taxes on it. In many cases non-residents pay a flat rate of 25% of the gross income they earn from their property in Spain.
- Not rented out – non-resident property owners who do not rent out their property and who do not have any other source of income in Spain pay income tax based on the value of their property. The tax rate is fixed as 25% of 2% of the catastral value of the property.