Purchase taxes and costsArticle 3 of 6 · 6 min read
VAT (IVA) and stamp duty (AJD) on a new-build purchase
Explains which purchase taxes apply when you buy a new home from a developer: VAT plus regional stamp duty instead of transfer tax, and how this differs in the Canary Islands, Ceuta and Melilla. For buyers of new-builds.
Terms used
- IVA — IVA is Spain's value-added tax, charged on top of the price of a new home bought from a developer.
- AJD — AJD is a regional stamp duty charged on the notarised deed of a new-build purchase.
- ITP — ITP is the regional transfer tax paid on resale homes instead of IVA.
- IGIC — IGIC is the Canary Islands' general indirect tax, which replaces IVA there.
- IPSI — IPSI is the local indirect tax in Ceuta and Melilla, used instead of IVA.
Key rules
- New-build taxes: A developer sale pays IVA plus AJD, not ITP.
- AJD: Your region sets the AJD rate, so check it before you budget.
- Canary Islands: IGIC replaces IVA there, and AJD still applies.
- Ceuta and Melilla: They use their own local tax, IPSI, instead of IVA.
Which taxes you pay on a new-build
When you buy a new home from a developer, you pay IVA plus AJD. You do not pay ITP. IVA is 10% of the price, charged on top. AJD is a percentage of the price that your region sets, and it is added on the deed.
The Canary Islands, Ceuta and Melilla work differently. See the last section.
IVA: the 10% on top
The 10% applies to the first sale of a new or fully rebuilt home by a developer. Up to two garages bought with the home follow the same rate. Land and commercial premises pay 21%.
Subsidised protected housing (VPO) of the special regime, and some public promotions, pay 4%.
So on a home priced at €300,000, you add €30,000 of IVA to the price.
AJD: the regional rate
AJD is charged on the notarised deed. The state default is 0.5%, but each region sets its own rate. Common rates in 2025 were:
- Madrid: 0.75%
- Andalusia, Baleares, Asturias: 1.2%
- La Rioja: 1%
- Catalonia, Valencia, Murcia, Galicia, Aragon, Castilla-La Mancha, Castilla y León, Cantabria, Extremadura: 1.5%
Overall the range runs from 0.5% to 1.5%. Some regions give reduced rates to certain buyers, such as large families or young people. Ask your regional tax agency whether you qualify and what the rate is now.
When ITP applies instead
A resale from a private person pays ITP, not IVA. Later sales of a home are normally ITP too.
Some sales by a business are different:
- A business selling a new building or a building plot can charge IVA.
- Some business resales are exempt from IVA. In that case ITP applies.
Check the seller's status and the invoice or contract before you sign. The decision block below helps you sort out which case you are in.
Canary Islands, Ceuta and Melilla
Canary Islands. IGIC replaces IVA. On a new home from a developer it is 7%, or 3% for protected housing. AJD still applies, at 0.75% in the general case. Resales pay ITP at the Canary Islands' own rate of 6.5%, not IGIC.
Ceuta and Melilla. There is no IVA. A local tax called IPSI applies instead. New homes from developers normally pay it at a low rate that each city sets. ITP and AJD apply under the state rules, and local relief of around 50% may be available. Ask each city's tax office for the current rates and reliefs.
The comparison table below puts resale, new-build and Canary Islands taxes side by side.
Choosing between options
Which taxes apply to the home you are buying?
-
IVA plus AJD: The home is new or substantially rebuilt and the seller is a developer or business selling it for the first time. IVA is 10%, and you also pay regional AJD on the deed.
-
ITP instead of IVA: You buy a resale from a private person, or any second or later sale. Some resales by businesses are exempt from IVA, and ITP applies to those too.
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IVA on a business resale: The seller is a business and the property is a new building or a building plot. IVA applies here even though it is not a first sale by a developer.
-
A different regime: The property is in the Canary Islands, Ceuta or Melilla. The Canary Islands use IGIC instead of IVA. Ceuta and Melilla use their own local tax, IPSI.
Check who the seller is and whether this is the first sale of a new or rebuilt home. A first sale by a developer or business means IVA plus AJD. A sale by a private person means ITP.
Resale, new-build and Canary Islands purchase taxes compared
Which tax you pay depends on who sells the home and where it is. A resale from a private owner triggers ITP. A first sale of a new home by a developer triggers IVA plus AJD. In the Canary Islands, IGIC takes the place of IVA.
| Resale | New build (mainland and Balearics) | New build (Canary Islands) | |
|---|---|---|---|
| Tax | ITP (transfer tax) | IVA (VAT) plus AJD (stamp duty on the deed) | IGIC (the Canaries' version of VAT) plus AJD |
| Triggered by | Buying from a private person, or from a business whose sale is exempt from IVA | Buying a new or fully rebuilt home from a developer | Buying a new or fully rebuilt home from a developer |
| Rate | Set by each region | IVA is 10%, charged on top of the price. AJD is also set by the region. | IGIC is 7%, or 3% for protected (VPO) housing. AJD is 0.75% in the general case. |
| Who pays | You, the buyer | You, the buyer, for both taxes | You, the buyer, for both taxes |
| When | Return filed and paid within 30 working days of signing the deed | The developer charges IVA on each payment, including deposits and instalments, and again on the balance at the deed. AJD is due within 30 working days of the deed. | The developer charges IGIC on the price. AJD is due within 30 working days of the deed. |
Reading the table
- Resale rates vary a lot. They run from 4% in the Basque Country to 10% in Catalonia, Valencia and Cantabria. Madrid is 6% and Andalusia 7%. The Canary Islands charge ITP of 6.5% on resales, not IGIC. Regions change rates often, so confirm the current figure with the regional tax agency where the property is.
- Some sales by businesses are different. A company selling a new building or a building plot may charge IVA. If the sale is exempt from IVA, ITP applies instead. Ask the seller which one applies before you sign.
- You are the taxpayer even if someone else files. A gestoría usually files the return and pays online for you. The notary sends the deed to the regional authority, but the legal duty stays with you.
- Budget for both taxes on a new build. IVA is added to every payment you make to the developer, and AJD comes later as a separate bill after the deed.
Frequently asked questions
Does a new home in the Canary Islands pay IVA?
No, a new home from a developer in the Canary Islands pays IGIC instead of IVA. The rate is 7%, or 3% for subsidised VPO housing.
What tax do I pay on a new home in Ceuta or Melilla?
You pay IPSI, a local indirect tax, instead of IVA. Each city sets its own rates, and developer sales are normally taxed at a low rate. Ask the city's tax office about the rate and about local relief on other transfer taxes.
Which regional AJD rate will I pay on a new-build deed?
Your region sets the AJD rate, and most fall between 0.5% and 1.5%. In 2025 Madrid charged 0.75%, Andalusia 1.2% and Catalonia 1.5%. Some regions reduce the rate for large families or young buyers.
Do I pay IVA if I buy a resale home from a business?
Sometimes, yes: a business seller can charge IVA when the property is a new building or a building plot.
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