Property Purchase Process and Costs on the Costa del Sol

Property Purchase Process

Property Purchase Process and Costs on the Costa del Sol (Resale vs New Development)

Buying property on the Costa del Sol is a transparent and well-regulated process, but understanding how the Property Purchase Process works and what the real costs are is essential before committing. One of the most common mistakes buyers make is underestimating purchase taxes or not understanding the difference between resale properties and new developments.

This factual guide explains the property purchase process in Spain, breaks down all associated costs, and clearly shows the tax differences between resales and new builds, including when reduced ITP may apply for purchases below €500,000.

The Property Purchase Process in Spain (Step by Step)

Whether you are buying a resale apartment or a brand-new development, the legal structure of the Property Purchase Process is the same:

  1. Offer Accepted
    Price and conditions are agreed in writing between buyer and seller.
  2. Reservation Agreement
    A reservation deposit (typically €3,000–€10,000) temporarily removes the property from the market while legal checks begin.
  3. Private Purchase Contract (Contrato Privado)
    Usually signed within 2–4 weeks. The buyer pays up to 10% of the purchase price, minus the reservation deposit.
  4. Completion at the Notary
    The title deed (Escritura Pública) is signed before a Spanish notary, final funds are paid, and ownership is transferred.

👉 The main differences in cost arise from taxation, which depends on whether the property is a resale or a new development.

Property Purchase Process Costs for Resale Properties on the Costa del Sol

Resale properties are homes that have been previously owned and are taxed using ITP (Property Transfer Tax).

Taxes on Resale Properties

  • ITP (Impuesto sobre Transmisiones Patrimoniales): 7% of the declared purchase price
  • Paid by the buyer within 30 days of completion
  • No VAT and no stamp duty (AJD) apply to resales

Typical Buyer Costs for a Resale Property

In addition to ITP, buyers should budget for the following:

  • Property Transfer Tax (ITP): 7%
  • Independent lawyer fees (usually ~1%)
  • VAT on lawyer fees (21%)
  • Notary fees
  • Land Registry fees
  • Gestoría / administrative fees
  • NIE application costs
  • Banking and currency exchange costs
  • Mortgage setup costs (if applicable)

Estimated Total Costs (Resale)

  • Typically 9% to 12% of the purchase price
  • Depends on property value, financing, and legal complexity

👉 For resale opportunities, see our dedicated page for
property for sale in La Cala de Mijas

Reduced ITP in Andalucía (Important for Purchases Below €500,000)

Andalucía offers reduced ITP rates in specific situations, but these are not automatic and must meet strict criteria.

Reduced ITP May Apply If:

  • The declared purchase price is below €500,000
  • The property qualifies under regional tax incentives
  • The buyer meets specific legal and fiscal conditions
  • The purchase is correctly declared and documented

Important Notes on Reduced ITP

  • Eligibility depends on buyer profile and property classification
  • Incorrect claims can result in back taxes, penalties, and interest
  • Always confirm eligibility with your independent lawyer before completion

⚠️ Reduced ITP should be treated as a potential benefit, not an assumption.

Purchase Costs for New Developments (Off-Plan or Key-Ready)

New developments are taxed differently from resales and are subject to VAT and stamp duty, not ITP.

Taxes on New Developments

  • VAT (IVA): 10% of the purchase price
  • Stamp Duty (AJD): 1.2% in Andalucía

Typical Buyer Costs for New Developments

  • VAT (10%)
  • Stamp Duty (AJD – 1.2%)
  • Independent lawyer fees
  • VAT on lawyer fees (21%)
  • Notary fees
  • Land Registry fees
  • Gestoría / administrative fees
  • Banking and currency exchange costs
  • Mortgage setup costs (if applicable)

Estimated Total Costs (New Build)

  • Typically 13% to 14% of the purchase price
  • Higher than resales due to VAT and AJD

Resale vs New Development: Cost Comparison

ItemResale PropertyNew Development
Main taxITP (7%)VAT 10%
Stamp duty (AJD)NoYes (1.2%)
Total buyer costs9–12%13–14%
Payment structureMostly at completionOften staged
Property conditionExistingBrand new
Energy efficiencyVariesHigh

Why Understanding Property Purchase Process Matters

Accurately calculating purchase costs:

  • Prevents budget surprises
  • Helps compare resale vs new build options fairly
  • Allows realistic investment planning
  • Avoids tax and compliance issues

Professional guidance is essential, especially for international buyers navigating Spanish tax rules for the first time.

For additional insight into the Costa del Sol market, you may also find it useful to explore guidance from experienced local specialists such as Plexo Properties.

Final Thoughts

The Costa del Sol remains one of Europe’s most attractive property markets, but successful purchases rely on clarity, preparation, and correct tax handling. Understanding the difference between resale and new development costs, and knowing when reduced ITP may apply, allows buyers to move forward with confidence and realistic expectations.

If you are planning to buy, always ensure that you you follow the Property Purchase Process:

  • All costs are calculated in advance
  • Taxes are confirmed before signing
  • Independent legal advice is in place

A well-informed buyer is a protected buyer.

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