Taxation in Madrid

2026-08-23

Buying a New-Build Property in Madrid: VAT, AJD and Other Taxes

Buying a New-Build Property in Madrid | BARNES

Buying a new-build property in Madrid is an attractive option for those looking for energy efficiency, contemporary design, communal areas, parking, home automation or a property designed around modern lifestyles. However, before signing a reservation agreement or sale contract, it is essential to understand the taxation involved in the transaction.

Unlike a resale property, where Property Transfer Tax is normally payable, the purchase of a new-build property in Madrid is mainly subject to VAT and Stamp Duty, known in Spain as AJD. These taxes, together with notary fees, Land Registry costs, administrative fees, valuation costs and potential mortgage-related expenses, form part of the total acquisition cost.

For those looking to buy an apartment in Madrid, calculating these expenses correctly is essential in order to determine the true budget required for the transaction.

What is considered a new-build property?

A new-build property is a home purchased directly from the developer as a first transfer. In this case, the transaction is subject to VAT rather than Property Transfer Tax.

The purchase of a new property requires the buyer to pay Value Added Tax, calculated on the purchase price according to the rate in force at the time of the transaction.

This difference is essential if you are comparing apartments for sale in Madrid on the resale market with new-build developments in Madrid. The advertised price does not always represent the final cost because the applicable taxes differ.

VAT on new-build property: how much do you pay?

In general terms, the purchase of a new residential property directly from the developer is subject to 10% VAT.

Certain types of officially protected housing under specific schemes may be subject to a different rate.

This means that if you purchase a new-build property for €1,000,000, you should generally budget an additional €100,000 in VAT.

For prime properties and luxury apartments in Madrid, this amount should be included in the real acquisition budget from the outset.

VAT on parking spaces and storage rooms

In new-build developments, it is common for the property to be sold together with a parking space and storage room.

In many cases, when these annexes are transferred together with the residential property and meet the applicable requirements, they follow the same tax treatment as the property itself.

For the buyer, the key is to review how the transaction is structured: whether the parking space and storage room are included in the price, whether they are transferred as annexes, whether they are independent registered units and how they appear in the contract and deed.

In luxury apartments in Madrid, parking and storage can represent a significant part of the final value. They should therefore be assessed as part of the investment rather than simply as additional extras.

Stamp Duty: Actos Jurídicos Documentados

In addition to VAT, the purchase of a new-build property also generates Stamp Duty, known in Spain as Actos Jurídicos Documentados (AJD).

The purchase of a newly built residential property therefore involves both VAT and AJD in its notarial documents category.

AJD applies to the formalisation in a public deed of certain transactions that can be registered. In a new-build purchase, it is paid by the buyer and must be settled within the relevant deadline.

Deadline for filing Stamp Duty

The general filing deadline for AJD in the Community of Madrid is 30 working days from the formalisation of the taxable act or contract, meaning from the date of the deed or corresponding document.

This deadline is important because the transaction does not end when you sign before the notary: taxes still need to be settled, the property registered and the remaining documentation completed.

What happens if there is a mortgage?

If you finance the purchase with a mortgage loan, additional expenses may arise, including the property valuation, possible administrative fees and other costs associated with the financing process.

When the purchase is financed through a mortgage, AJD is also relevant to the formalisation of the loan. Under the current rules, the lender is responsible for paying the mortgage-related AJD.

This does not eliminate other financing costs. Before buying, it is advisable to compare bank conditions, APR, linked products and the payment schedule, particularly when purchasing off-plan.

Other costs when buying a new-build property

In addition to VAT and AJD, you should budget for other completion costs:

Notary fees.
Land Registry fees.
Administrative fees, where applicable.
Property valuation fees if there is a mortgage.
Linked insurance products if you choose to take them out.
Utility connection or activation costs.
Potential community fees from the date of handover.

In the Madrid luxury real estate market, these amounts may appear relatively small compared with the total price of the property, but they should still be calculated accurately to avoid budget overruns.

Buying off-plan: payments and tax planning

When buying off-plan, the payment schedule is usually divided between the reservation, private contract, payments during construction and final payment upon completion before the notary. Each development may have a different structure.

Before signing, review:

The total price plus VAT.
The payment schedule.
Guarantees covering amounts paid in advance.
The estimated completion date.
The specification of materials and finishes.
Floor plans.
The building licence.
The first occupancy licence where applicable.
Penalties or contractual conditions in the event of delays.

Taxation should not be considered only on the day of completion. With new-build property, tax planning accompanies the entire process from reservation to handover.

Difference between the advertised price and the total cost

One of the most common mistakes when buying a new-build property is to focus only on the base price.

If a property is advertised at €900,000, the buyer must add taxes and other expenses in order to determine the true acquisition cost.

As a general guide, for a standard new-build property the buyer should budget for:

The purchase price.
10% VAT.
AJD.
Notary fees.
Land Registry fees.
Administrative costs.
Valuation fees if financing is required.
Potential initial handover costs.

This calculation is essential for making informed decisions and comparing different developments accurately.

New-build vs resale property: tax differences

The main tax difference is straightforward. New-build property is subject to VAT and AJD, while resale property is normally subject to Property Transfer Tax.

Two properties with the same advertised price can therefore have different acquisition costs depending on whether they are new-build or resale.

When looking to buy an apartment in Madrid, this comparison is essential. Buyers should assess not only the sale price but also the total acquisition cost and the characteristics of the asset.

Tax benefits or allowances: each case must be reviewed

Tax treatment may vary depending on the type of property, the buyer’s profile and any tax benefits or allowances in force.

The regulations may provide specific reductions or treatments in certain circumstances, so it is advisable to have your individual situation reviewed by a tax adviser before signing.

Not all developments, buyers or properties necessarily receive the same tax treatment.

Taxation for international buyers

Madrid attracts a growing number of international buyers interested in luxury homes in Madrid, new-build property, serviced residences and homes in prime locations.

For non-resident buyers, purchasing a new-build property requires careful coordination regarding the NIE identification number, bank account, source of funds, financing, acquisition taxes and future tax obligations.

If you are buying from outside Spain, it is advisable to prepare the documentation in advance and coordinate the notary, bank, tax adviser and legal representative.

In highly sought-after developments, having the documentation ready can be important in completing the transaction within the required timeframe.

Areas of Madrid with the strongest demand for new-build property

New-build property in Madrid is particularly sought after in areas where buyers prioritise efficiency, services and convenience.

Within the prime segment, developments in established neighborhoods and well-connected growth areas are especially attractive.

Some of the most sought-after areas include:

Chamartín and Madrid Nuevo Norte, thanks to their urban growth potential and connection to the financial district.
Salamanca district, where new-build supply is scarce and highly valued.
Chamberí, particularly premium refurbishments in classical buildings.
Retiro and Jerónimos, because of their location and very limited supply.
Tetuán and northern Castellana, where some developments offer height, views and communal facilities.
Pozuelo, La Moraleja and Aravaca, for buyers seeking family homes, gated communities, gardens or swimming pools.

What to check before buying a new-build property

Before purchasing a new-build property, you should review:

The identity and track record of the developer.
The building licence.
The specification of materials and finishes.
The final floor plans.
Usable and built floor areas.
Included annexes.
Energy efficiency.
Estimated community fees.
The payment schedule.
Guarantees covering amounts paid in advance.
The delivery date.
The applicable tax regime.

For high-value properties, it is also advisable to assess orientation, floor level, views, communal areas, parking, storage, security, sustainability and future resale liquidity.

New-build property and energy efficiency

One of the main reasons many buyers choose new-build homes is energy efficiency.

Newer buildings generally incorporate better insulation, more efficient climate-control systems, ventilation, higher-quality windows and more favourable energy ratings.

This not only improves day-to-day comfort. It can also influence resale value, rental demand and maintenance costs.

For buyers of luxury apartments in Madrid, energy efficiency is no longer simply a technical detail, but an increasingly important selection criterion.

New-build property as an investment

Buying a new-build property in Madrid can be an attractive investment when the location, price and product are well aligned.

Buyers particularly value properties with efficient layouts, terraces, parking, communal areas, security and additional services.

However, not every new-build property is automatically a good investment. It is important to analyse:

The price per square metre.
Future competition.
Rental demand.
The quality and track record of the developer.
Future community costs.
Liquidity within the area.

In prime property investment, buying well is more important than buying quickly.

Common mistakes when buying a new-build property

The most common mistakes include:

Failing to add VAT and AJD to the advertised price.
Not reviewing the payment schedule.
Not checking the guarantees covering advance payments.
Failing to analyse the orientation and actual views.
Not reviewing the specification of finishes.
Underestimating community fees.
Not comparing the development with renovated resale properties.
Failing to obtain tax advice before signing.

A new development may be excellent, but the purchase should be assessed with the same level of care as any other property transaction.

Conclusion

Buying a new-build property in Madrid can be an excellent opportunity for buyers seeking comfort, efficiency, contemporary design and services.

However, the real cost goes beyond the advertised price. VAT, AJD, notary fees, Land Registry costs, financing and handover expenses should all be calculated from the outset.

The key is to compare the available options carefully, review the documentation and understand the tax implications before signing.

Buy your new residence

How BARNES Madrid can assist you

At BARNES Madrid, we assist you with the purchase of new-build and prime properties through a comprehensive approach: identifying opportunities, analysing location, reviewing documentation, coordinating with tax advisers and supporting you through to completion before the notary.

If you are looking to buy an apartment in Madrid, invest in new-build property in Madrid or compare new developments with renovated homes in Salamanca, Chamberí, Chamartín, Retiro, Justicia or Madrid Norte, our team can assist you throughout the process.

Visit us at 15 Velázquez Street, in the heart of the Salamanca district. BARNES Madrid.