Property Transfer Tax (ITP) vs. VAT (IVA)
When purchasing property in Costa Blanca, understanding the difference between ITP and VAT is crucial. The type of property you buy (resale vs. newbuild) directly determines which tax applies, and the impact on your budget can be significant.
Buying a Resale Property
If you’re purchasing a pre-owned home from a private seller, you’ll pay the Impuesto de Transmisiones Patrimoniales (ITP), Spain’s property transfer tax.
Rate: Typically, 10% in the Valencian Community, which includes Costa Blanca
Who pays: The buyer is responsible for this tax
When: Paid at the time of signing the deed (escritura) before the notary
This tax is calculated based on the declared purchase price or the cadastral reference value, whichever is higher. Hence it is essential to verify this before closing the deal.
Buying a Newbuild Property
If you’re buying directly from a developer or builder, the tax structure changes:
VAT (IVA): Charged at 10% on the purchase price
Stamp Duty (AJD): An additional 1.5% in the Valencian region
Who pays: Again, the buyer covers both taxes
These taxes apply to newly constructed homes that have never been occupied. VAT is paid directly to the developer, while AJD is paid to the regional tax office.
Suggestion from Bo Estate Solutions
Always confirm whether the property is officially classified as newbuild or resale! This distinction affects your tax payments, legal obligations, and financing options.
As real estate advisor I can help you verify this early in the process to avoid costly surprises. Please contact me if you consider purchasing a property on the sunny Costa Blanca. I am glad to help!
