Spain remains one of Europe's most active markets for international property buyers. The Costa del Sol, Costa Blanca, Mallorca, and the Balearics attract consistent demand from UK, German, Scandinavian, and Middle Eastern buyers. The market offers both a well-developed off-plan new-build sector — particularly on the southern and eastern coasts — and a vast stock of resale properties ranging from modern apartments to rural cortijos. The choice between the two routes has distinct tax, legal, and practical implications.
The Spanish Market Context
Spain's property market recovered strongly from the 2008–2013 crisis, with coastal and city markets in particular reaching new price levels by the mid-2020s. New-build development is concentrated on the costas, where developers target international buyers seeking holiday homes or investment properties. The resale market is broad, from modern estates in well-established urbanisations to older village and rural stock.
One significant change: Spain closed its property-based Golden Visa programme to new applications in April 2025. Buyers who were considering Spanish property partly for residency purposes must now seek alternative routes. This is an important fact to verify with a qualified immigration lawyer.
Off-Plan New-Build in Spain: How It Works
Off-plan purchases in Spain involve exchanging a reservation contract (contrato de reserva or contrato de arras) and then a purchase contract (contrato de compraventa), with stage payments made during construction. The final balance is paid at notarial completion (escritura), when you receive the keys and register the property.
Legal Protection: The Bank Guarantee (Aval Bancario)
Spain's consumer protection framework — strengthened significantly by a 2015 Supreme Court ruling — requires developers to hold all off-plan stage payments in a dedicated bank account and to provide buyers with either a bank guarantee (aval bancario) or an insurance policy covering those payments. If the developer fails to complete the project, the buyer is entitled to a full refund of all stage payments plus legal interest under this guarantee.
This is a meaningful protection, and it is legally enforceable. However, you must ensure the guarantee document is properly issued and held. Your Spanish lawyer (abogado) should verify this before any stage payment is made. Do not rely on verbal assurances or a developer's claim that the guarantee is "in process."
IVA on New-Build Properties
New-build residential properties in Spain are subject to IVA (VAT) at 10% of the purchase price. Additionally, Stamp Duty (Impuesto de Actos Jurídicos Documentados, AJD) is payable at 1–2% depending on the autonomous community. In practice, a new-build buyer in Andalucía or Valencia should budget for approximately 11–12% in transaction costs on top of the purchase price.
New-Build Warranties
New-build properties in Spain carry statutory warranties: 10 years for structural defects, 3 years for waterproofing and habitability defects, and 1 year for finishing defects. These warranties are enforceable against the developer (and, in some cases, the builder and architect), and they transfer with the property.
Resale Property in Spain: How It Works
Resale purchases follow a similar notarial process: reservation, private purchase contract (contrato de arras), and notarial completion. The key differences are in the tax treatment and the immediate availability of the property.
ITP: The Resale Transfer Tax
Instead of IVA, resale properties attract ITP (Impuesto de Transmisiones Patrimoniales). Rates are set by each autonomous community and range from 6% to 11% as of 2026. Key rates:
- Andalucía (Costa del Sol): 7%
- Valencia (Costa Blanca): 10%
- Catalonia: 10%
- Balearic Islands (Mallorca, Ibiza): 8–13% (tiered by purchase price)
- Murcia: 8%
These rates are applied to the declared sale price or the minimum tax value (valor de referencia) set by the Catastro — whichever is higher. Since 2022, the Catastro's reference values have more closely aligned with market prices, reducing the scope for under-declaration.
Due Diligence on Resale
A pre-purchase survey is strongly recommended on older resale properties, particularly rural fincas, village houses, and properties with pools or extensive grounds. Check:
- Land registry (Registro de la Propiedad): confirms ownership, dimensions, and encumbrances
- Catastral reference: confirms tax classification and official description
- Community of owners charges: obtain a certificate that there are no unpaid community fees
- IBI (council tax) and utility bills: check these are current
- Planning status: particularly important for rural properties, which can have unauthorised extensions
Side-by-Side Comparison
| Factor | Off-Plan New-Build | Resale |
|---|---|---|
| Tax on purchase | IVA 10% + AJD 1–2% (total ~11–12%) | ITP 6–11% (region-dependent) |
| Stage payment protection | Bank guarantee (aval bancario) legally required | Full price at notary completion |
| Entry timeline | 12–36 months (project-dependent) | Immediate — keys at notary completion |
| Rental income | None until completion | Immediate if tenanted |
| Warranties | 10-yr structural, 3-yr waterproofing, 1-yr finishing | As-is (no warranty from seller) |
| Energy efficiency | High (modern building regulations) | Variable — often poor in older stock |
| Negotiating room | Limited (developer prices are firmer) | Good, particularly for motivated sellers |
| Golden Visa eligibility | Closed April 2025 — no new visas | Closed April 2025 — no new visas |
| Survey required | Snagging on handover | Strongly recommended |
| Personalisation | Sometimes possible (fixtures, layout tweaks) | Renovation at buyer's cost |
Advantages of Buying Off-Plan in Spain
Legal protection on stage payments. The mandatory bank guarantee framework gives off-plan buyers in Spain stronger contractual protection than in many comparable markets. If the developer fails, your money is recoverable.
Modern specification and energy efficiency. New-build properties in Spain must comply with current building regulations (Código Técnico de la Edificación), delivering significantly better energy performance than most resale stock. Low energy costs matter to tenants and to long-term capital value.
Statutory warranties. A 10-year structural warranty from a developer is a material advantage over resale, where no such protection exists.
Price lock. In rising markets — as seen in the Costa del Sol and Mallorca over recent years — locking in a purchase price at launch can deliver appreciation by the time you complete, even after allowing for the stage payment structure.
Risks of Buying Off-Plan in Spain
Construction delays. Delays of six to eighteen months are not uncommon, particularly in resort markets where labour and materials are constrained. Ensure your contract includes delay penalty provisions.
Market risk during construction. If the market softens, the unit may be worth less at completion than your contracted price. You cannot sell during construction without developer consent.
Higher transaction costs. IVA at 10% is generally higher than ITP in many regions, making off-plan more expensive from a tax standpoint in some autonomous communities.
No Golden Visa. The closure of Spain's property Golden Visa in April 2025 removes a significant incentive for non-EU buyers who were targeting residency alongside investment.
Advantages of Buying Resale in Spain
Immediate income and occupancy. Resale buyers can rent out or occupy the property from the day of notarial completion.
Potential tax advantage. In regions with lower ITP rates (Andalucía at 7%, for example), the total transaction tax burden may be lower than on a new-build.
Negotiating power. Private sellers are often more flexible than developers on price, particularly in a market where higher interest rates have extended time-on-market for some properties.
Established communities. Buying into an existing urbanisation means you can assess the quality of management, infrastructure, neighbours, and facilities before committing — information unavailable when buying into an unbuilt development.
Risks of Buying Resale in Spain
Older stock condition. Pre-2000 Spanish coastal construction was not always of high quality. Flat roofs, inadequate damp proofing, and ageing electrics are common in properties from the 1980s and 1990s. A survey is essential.
Illegal extensions and planning irregularities. Rural and coastal Spain has a significant stock of properties with unauthorised building work (obras sin licencia). Regularising these can be costly or, in some cases, impossible. A thorough legal and planning search before purchase is non-negotiable.
Community fee arrears. Unpaid community fees pass with the property in Spain. Obtain a certificado de deudas (debt certificate) from the community administrator confirming the seller is up to date.
Due Diligence Checklist
- Appoint an independent Spanish lawyer (abogado) — not shared with the developer or agent
- Obtain the aval bancario before any stage payment (off-plan)
- Check Land Registry (Nota Simple) for encumbrances (both)
- Verify ITP/IVA applicable in the relevant autonomous community (both)
- Obtain NIE number before signing any contract (both)
- Check community fee and IBI status (resale)
- Commission a survey on older properties (resale)
- Confirm there is no unauthorised building work (resale, particularly rural)
- Verify rental licence requirements for holiday letting in the relevant municipality
Compliance Note
Property values can fall as well as rise. Rental yields and capital growth are not guaranteed and depend on market conditions, local demand, and regulatory changes. Spain's Golden Visa closed to new property applications in April 2025; this guide reflects that fact but rules can change — verify the current position with a qualified immigration lawyer. This guide is for general information only and does not constitute legal, tax, or investment advice. Always seek independent professional advice before making any property investment decision.
Related Guides
- Spain Property Location Guide
- Best Areas to Invest in Spain
- Spain Property Taxes and Fees
- Spain Property Financing Options
- Residency and Citizenship by Investment
- Current Listings
How Global Investments Can Help
Global Investments has over 32 years of experience in international property markets, with dedicated coverage of Spain alongside seven other key markets. We work with independent Spanish lawyers, vetted new-build developers on the Costa del Sol, Costa Blanca, and Mallorca, and established resale agents across Spain's most active markets.
Whether you are buying a holiday home, structuring a rental investment, or comparing Spain against other markets in our portfolio, we can provide the analysis and introductions you need to make a well-informed decision.
Contact the team at Global Investments or browse our current property listings for opportunities across Spain and our other seven markets.
Frequently asked questions
Is the Spanish Golden Visa still available via property investment?
No. Spain's Golden Visa programme was closed to new property-based applications in April 2025. No new residency visas can be obtained through property investment in Spain. Existing visa holders are unaffected. Buyers who were relying on this route for residency purposes must now consider alternative pathways, such as Spain's non-lucrative visa or the digital nomad visa, which are not linked to property investment.
What is an aval bancario and is it legally required?
An aval bancario is a bank guarantee that protects off-plan stage payments if a developer fails to complete the project. Under Spanish law — confirmed and strengthened by a 2015 Supreme Court ruling — developers are legally required to hold off-plan stage payments in a protected account and provide buyers with a bank guarantee or insurance policy. If the developer cannot complete, the buyer can claim their payments back under this guarantee. Always obtain the guarantee document before making any stage payment.
What is the difference between IVA and ITP on Spanish property?
New-build properties are subject to IVA (Spain's VAT) at 10% of the purchase price, plus Stamp Duty (AJD) at 1–2% depending on the region. Resale properties are exempt from IVA but instead attract ITP (Impuesto de Transmisiones Patrimoniales — transfer tax), which ranges from 6% to 11% depending on the autonomous community. Andalucía (which covers most of the Costa del Sol) currently charges ITP at 7%. This difference can be significant on larger purchases.
Do I need a Spanish NIE number to buy property?
Yes. An NIE (Número de Identificación de Extranjero) is mandatory for any property purchase in Spain. It is required to sign the purchase contract, pay taxes, and register the property. It can be obtained from a Spanish consulate in your home country or from a National Police office in Spain. Many buyers obtain their NIE through a Spanish lawyer acting under a power of attorney, which avoids the need to travel specifically for this step.
This guide is for general information only and does not constitute financial, legal or tax advice. Programme rules, prices and tax rates change; verify current requirements with a qualified adviser before acting.