IVA tax or ITP: does a new build in Spain cost you more than a resale?
The question is usually debated as a matter of taste — pristine versus established. Financially it is something else: two entirely different payment profiles.
Does a new build with IVA tax also need more equity than a resale?
With IVA and AJD, a new build usually costs more in tax than a resale with ITP, and it almost always needs more equity. IVA is 10 per cent on residential property on the Spanish mainland. The bigger difference: on a new build you carry two to three years of instalments with no mortgage behind them.
IVA + AJD versus ITP
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.
New build and resale differ across the whole process: IVA tax 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.
It is the equity requirement that is higher, not the price: The whole construction phase is self-funded before the bank steps in.
Purchase costs stay equity
Lending is measured against the value of the property; taxes and fees sit on top as equity.
IVA tax or ITP — which costs me more, a new-build or a resale in Spain? On tax — IVA tax plus AJD against ITP — usually the new-build, and on the 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 1 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.
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.
The bank 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.
ITP tax versus VAT when buying new build in Ibiza
On a new build you pay IVA plus AJD, on a resale the regional ITP instead, and this page gives no separate Ibiza rate.
IVA is 10 per cent on residential property on the Spanish mainland, while the ITP rate is set by the autonomous community. Both are purchase costs that are not financed, so they add to your equity requirement.
Frequently asked questions
Is new-build more expensive?
Not necessarily in the price. But the equity required before bank financing is markedly higher, because the whole construction phase is self-funded.
Can purchase costs be financed?
For non-residents, lending is measured against the value of the property; taxes and fees sit on top as equity.
Do I get a higher loan-to-value on a new-build?
No. The limits for non-residents do not depend on the type of purchase. New does not mean better secured.
What about parking spaces and storerooms?
Sold as separate legal units, they can be treated differently for tax. Clarify this before the contract — and only a tax adviser may advise you on it.
New-build in Spain — let us work through the construction phase together
We 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.
Related pages
Building mortgage for a self-build in Spain: how does the bank pay out?
Building mortgage for a self-build in Spain: the hipoteca de autopromotor releases funds against construction progress. The plot counts as your equity.
Mortgage interest rate in Spain: when is it fixed on a new build?
Mortgage interest rate in Spain on a new build: approval comes at the end, two to three years after the private contract. Why, and how to limit the risk.
Non-resident mortgage on foreign income: will a Spanish bank fund a new-build?
Non-resident mortgage on foreign income: earning in francs, pounds, dollars or dirhams means tighter Spanish lending limits — and years of currency risk.
Off-plan property in Spain: what to check before you sign the private contract?
Off-plan property in Spain: the private contract binds. What to settle beforehand — protection, licence, financing clause, equity plan.
Construction phase financing in Spain: why won't the standard bank pay?
Construction phase financing in Spain: the mortgage only comes at completion, so off-plan instalments of often 20 to 30 per cent are your own money.
Equity release: how do you finance developer instalments in Spain?
Equity release against German property: developer instalments in Spain are equity — raise up to 80 % of the lending value and appear as a cash buyer.
Content by Siegfried Perini — local brand representative since 2019, active in real estate since 1992, entered in the German intermediary register (§ 11a GewO) as a person directly involved in brokerage and advice. Point of contact for German-speaking buyers in Spain and Portugal. Brokerage by Olga Nikushkina, mortgage credit intermediary under § 34i German Trade Regulation (GewO); in Portugal through a locally licensed intermediary.