Definitive tax guide for buying a house in the Valencian Community: Clarity on ITP, AJD and additional costs

Buying a home on the Mediterranean is the dream of many, but the fine print of taxation can turn that dream into a financial puzzle. If you are looking for properties on the Costa Blanca, you should not only look at the sale price: taxes and associated costs can add between 12% and 15% extra to the final cost.

In this guide we break down with surgical precision which taxes you will pay in the Valencian Community, which allowances you can take advantage of, and how to calculate your real budget to avoid last-minute surprises.

1. Taxes depending on the type of property: New or Second-hand?

Taxation in Spain is sharply divided depending on whether you are receiving the keys for the first time or whether the property has had previous owners.

Purchase of New Property (VAT and AJD)

If you buy directly from a developer, the taxes that apply are:

• VAT (Value Added Tax): A 10% rate generally applies. For publicly subsidized housing under a special regime, this can drop to 4%.

• IAJD (Tax on Documented Legal Acts): In the Valencian Community, the general rate for this tax is 1.5%. This tax covers the signing of the notarial document.

Purchase of Second-hand Property (ITP)

This is where the Valencian Community has one of the most specific regulations. The main tax is the ITP (Property Transfer Tax).

• General Rate: 10% on the reference value of the property.

• What is the Cadastral Reference Value? Since 2022, the ITP is not calculated on what you pay for the house, but on the value assigned by the tax authority. It is vital to check this figure before signing.

2. Reduced ITP rates in the Valencian Community (2026)

Not everyone pays 10%. The Generalitat Valenciana offers tax benefits for certain groups:

Expert note: To apply these reduced rates, there are limits on assets and annual income that must be reviewed at the time the tax becomes due.

3. Additional costs: Beyond taxes

In addition to the tax burden, there are four fixed costs you should include in your investment plan on the Costa Blanca:

1. Notary: Notary fees are regulated by law (tariffs). They usually range between €600 and €1,000, depending on the property value and the length of the deed.

2. Property Registry: Registering the deed of sale usually costs between €400 and €700.

3. Gestoría (administrative agency): Not mandatory but highly recommended to process tax payments and registration. It usually ranges from €300 - €500.

4. Appraisal (if there is a mortgage): If you need financing, the bank will require an official appraisal, which costs between €300 and €600.

4. Specific costs for foreign buyers

If you are an international investor attracted by the lifestyle of Alicante or Valencia, you should take into account:

• NIE (Foreigner Identification Number): It is essential to settle any tax.

• Tax representation: Although not strictly mandatory for everyone, having a local advisor avoids mistakes that lead to fines from the Tax Agency.

• 3% withholding (Non-resident sellers): If you buy from someone who does not reside in Spain, you as the buyer are obliged to withhold 3% of the sale price and pay it to the Tax Agency (Form 211).

Conclusion: The importance of good planning

Buying a house in the Valencian Community is one of the best patrimonial investments you can make, but success lies in financial transparency. Adding approximately 13% to the sale price will give you the real figure you need to close the deal with peace of mind.

At Costa Blanca Investments, we not only help you find the property of your dreams, but we accompany you through the entire fiscal and legal process to ensure your investment is secure and efficient.

Do you have questions about the reference value of a property? Contact us today and let our experts advise you.