New-build or resale?

Pros, Cons and Taxes to Help You Make the Right Purchase

When you decide to take the plunge and buy a home in Spain's best coastal areas, the big question arises: should I go for a brand-new home, or look for a resale property with character and an established track record on the market?

There is no one-size-fits-all answer. Both options have their advantages and drawbacks, and the right choice depends on your priorities, your budget and your lifestyle. What's more, the tax implications vary considerably depending on what you choose and where you buy.

Let’s break it all down so you can make the best decision, with no last-minute surprises.

1. New-Build Homes: The Joy of Being the First Owner

Buying a brand-new property (whether off-plan or newly completed) is a very attractive option, especially for international buyers and holiday-home buyers.

Los Pros:

• Modern design and efficiency: Open-plan layouts, integrated kitchens and large windows. They also have modern insulation that dramatically reduces electricity and heating/cooling bills.
• Builder’s guarantees: By law, you are covered against defects in finishes (1 year), habitability issues (3 years) and structural problems (10 years).
• Customisation and flexible payment: If you buy off-plan, you can often choose your finishes and pay in convenient instalments until handover.

Cons:

• Higher prices: New-build properties cost more per square metre due to current material and land costs.
• Waiting times: If you buy off-plan, you’ll have to wait between 12 and 24 months before you can move in.
• Location: New developments are usually in expanding areas, slightly further from historic town centres.

2. Resale Homes: Location and Immediate Availability

Previously owned homes make up the largest share of the market and hold some great opportunities.

Los Pros:

• Prime locations: They are often frontline beach properties, in established town centres or in urbanisations where there is no land left to build on.
• Immediate availability: Sign at the notary and the keys are yours much sooner.
• Price and room for negotiation: The price per square metre is usually more competitive, and there is more scope to negotiate with the seller.

Cons:

• Renovations and maintenance: You may well need to invest money in updating the bathrooms, kitchen or electrical installations.
• Lower energy efficiency: Older buildings use more energy to stay cool or warm.
• Hidden community costs: If the urbanisation is older, there may be special levies to repair façades, pools or lifts.

3. Crunching the Numbers: Taxes in Spain

This is where the decision becomes purely financial. In Spain, taxes vary dramatically depending on whether you buy new-build or resale. But be aware: taxes on resale properties depend on the region where the home is located.

Let’s compare the Costa del Sol (Andalusia) and the Costa Blanca (Alicante / Valencia region):

If you buy new-build, the taxes are the same throughout Spain.

New-build properties don’t pay transfer tax (ITP); they pay VAT instead.

• VAT (IVA): A flat 10% on the sale price stated in the title deed.
• AJD (Stamp Duty): A tax levied on formalising the deed before a notary.
  • On the Costa del Sol (Andalusia): 1.2%.
  • On the Costa Blanca (Alicante): 1.4%.

New-build summary: Allow for around 11.2–11.4% in taxes, depending on the region.

If you buy resale:

Resale homes don’t pay VAT; they pay ITP (property transfer tax), and the rate is set by each region:

• On the Costa del Sol (Málaga / Andalusia): ITP is set at a reduced general rate of 7%. This makes buying a resale home on the Costa del Sol very attractive from a tax perspective. (Even lower rates of 6% or 3.5% apply to young buyers or people with disabilities, subject to certain price conditions.)
• On the Costa Blanca (Alicante / Valencia region): The general ITP rate is 9% (11% for properties over €1,000,000). In other words, for the same resale home, you’ll pay 2% more in tax in Alicante than in Málaga. (There are also reduced rates for young buyers and for lower-value main residences, but the general rate for investors and second-home buyers is 9%.)

In Conclusion: Which Should You Choose?

• If you’re looking for complete peace of mind, no renovations to worry about and maximum energy efficiency, and you don’t mind paying a little more in tax or waiting for your home, new-build is the option for you.
• If you’re after the best location, the ability to move in straight away, a more competitive purchase price and, especially if you’re buying on the Costa del Sol, the benefit of noticeably lower transfer tax (7%), resale is your ideal option.

Shall we work out together which type of property best fits your budget?