New build or resale in Spain: two different payment profiles
The question is usually debated as a matter of taste — pristine versus established. Financially it is something else: two entirely different payment profiles.
Author & regulatory separation. Content author: Siegfried Perini. Mortgage brokerage in Spain and Portugal is carried out under the §34i GewO licence held by Olga Nikushkina; in Portugal through a locally licensed intermediary. This information does not replace legal or tax advice.
In short
Am I bound to the developer's bank?
IVA and AJD instead of ITP, equity during the build instead of at the notary: in Spain, new-build and resale differ across the whole process.
Is new-build more expensive?
Not necessarily in price. But the equity required before bank financing is markedly higher, because the whole construction phase is self-funded.
Can purchase costs be financed?
As a rule, no. For non-residents, lending is measured against the value of the property; taxes and fees sit on top as equity.
New-build or resale in Spain — which one costs me more?
On tax usually the new-build, and on equity requirement almost always. A new-build attracts IVA, 10 per cent on residential property on the Spanish mainland, plus AJD on the deed of sale — on a new-build that genuinely is a buyer's cost, unlike the AJD on the mortgage. In the Canaries IGIC applies instead of IVA at 7 per cent, plus AJD at 0.75 per cent. A resale purchase attracts regional ITP instead: 9 per cent in the Comunitat Valenciana, 11 per cent above one million euros, 6.5 per cent in the Canaries. The bigger difference is not the final total but the payment profile. On a resale you pay once, with financing available from the notary appointment. On a new-build you carry two to three years of instalments with no mortgage behind them, and you need that capital before any bank becomes involved.
IVA + AJD versus ITP
On a first transfer from a developer, Spanish VAT (IVA) and stamp duty (AJD) apply. On a resale purchase, transfer tax (ITP) applies instead, at a rate set by the autonomous community.
For the financing, one thing matters above all: these taxes are purchase costs and are not financed. They add to the equity requirement in both cases, merely composed differently. The tax treatment of an individual case belongs with a qualified tax adviser; we do not give tax advice.
The real difference
Resale: deposit on the preliminary contract, balance at the notary. The mortgage is created at the same moment as the transfer of ownership. The equity is due on one day — predictable, contained.
New-build: reservation, private contract, several milestone instalments across 18 to 36 months — all from your own funds. The mortgage only arises at the end. The equity requirement is stretched over years and higher in total before the bank engages at all.
For anyone with liquidity, that is no problem. For anyone whose capital is tied up in a German property, the construction phase must be engineered — before signing. How that works.
Sees both alike — at the end
On the day of the escritura the bank makes little distinction: it looks at the lower of price and tasación, and at your credit profile. Lending limits for non-residents are the same.
The difference lies entirely in the road there. Which is why new-build projects rarely fail at the bank — they fail in the construction phase.
Frequently asked
Is new-build more expensive?
Can purchase costs be financed?
Do I get a higher loan-to-value on a new-build?
What about parking spaces and storerooms?
More on the construction phase
New-build on income outside the euro
New-build in Spain — let us work through the construction phase together
I check which part of the price has to come from your own funds, what a German bank can raise against existing property, and what the Spanish bank takes on at completion — free of charge, no upfront cost.