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Buying Property in Italy & Spain: The “Hidden” Costs Your Agent Won’t Mention

StaffJanuary 23, 2026

Buying a home abroad is an emotional rollercoaster. You fall in love with the stone walls of a farmhouse in Tuscany or the sea view from a terrace in Alicante. You do the mental math: “The listing is €200,000. I have €220,000 saved. I can afford this!”

Stop right there.

In the US or UK, closing costs are a nuisance. In Italy and Spain, they are a massive financial burden that can derail your entire budget. The list price is never the real price.

We wrote this guide to save you from the “Tax Surprise” that catches so many foreign buyers off guard.

Part 1: Italy – The “Prima Casa” Secret

Italy’s tax system is complex, but if navigated correctly, it can be incredibly cheap. If navigated poorly, it is expensive. The tax you pay depends entirely on who you buy from and how you buy it.

The “Cadastral” Miracle Unlike many countries that tax you on the Market Value (what you paid), Italy often taxes you on the Cadastral Value (a government-assessed value based on square meters and room count). This value is often 50–70% lower than the market price.

Scenario A: The “First Home” Win Let’s say you buy a resale apartment in Abruzzo for €150,000. The Cadastral Value is likely around €40,000. If you declare this as your “Prima Casa” (First Home) and move your residency there within 18 months:

  • Registration Tax: 2% of €40,000 = €800.

  • That’s it. €800 in tax on a €150k house.

Scenario B: The “Second Home” Hit If you buy that same house as a vacation home (Seconda Casa):

  • Registration Tax: 9% of €40,000 = €3,600.

  • Still reasonable, but nearly 5x the cost.

Scenario C: The “New Build” Trap (The One to Watch) If you buy a newly built condo from a developer, or a restored farmhouse from a company, the rules flip completely. You do not pay tax on the Cadastral Value. You pay VAT (IVA) on the full Market Price.

  • The Cost: 10% VAT on €150,000 = €15,000.

  • Suddenly, your closing costs have jumped from €800 to €15,000.

Part 2: Spain – The High Cost of Entry

If Italy is complex, Spain is just expensive. You generally need to budget an additional 10% to 12% on top of the purchase price for closing costs.

Resale vs. New Build

  • Resale Homes (Second Hand): You pay Transfer Tax (ITP). This varies by region. In Valencia and Catalonia, it is about 10%. In Andalusia, it is 7%. Madrid charges only 6%, so does Navarra. Some regions may charge less or lower value houses or if the buyer belongs to a socially disadvantage group or is aged below 35 years old or if the property is registered as primary residence.

  • New Homes: You pay 10% VAT (IVA) nationwide. PLUS, you pay Stamp Duty (AJD), which is usually another 1.5%.

Client Story: The “Renovation” SurpriseMark and David found a “newly renovated” apartment in Barcelona. It looked brand new—new floors, new kitchen. They assumed they would pay the resale tax (10%). But because the renovation was so extensive that it was legally classified as a “major rehabilitation,” the seller was charging VAT (10%) plus Stamp Duty (1.5%). They hadn’t budgeted for the extra Stamp Duty, leaving them scrambling for cash at the notary.

Part 3: The Mortgage Maze

“Can I get a mortgage?” is the most common question we hear. The answer is yes, but it won’t look like a mortgage back home.

  • LTV Limits: Italian and Spanish banks are conservative. As a non-resident with foreign income, do not expect them to lend you 80% of the value. The standard is 50% to 60%. You need a large down payment.

  • Debt-to-Income: They strictly cap your debts at 30-35% of your income.

  • The “Pre-Approval” Myth: In the US, you get pre-approved in 24 hours. In Italy, a bank won’t even look at your file seriously until you have made an offer on a specific house. This makes the “Subject to Finance” clause in your offer absolutely critical—if you don’t include it and the bank says no, you could lose your deposit.

Part 4: The Agent vs. You

Finally, a word on agents. In Italy, the agent takes a commission from both the buyer and the seller (usually 3% + VAT from each). In Spain, the seller usually pays the agent, but in some regions, the agent will ask the buyer for a fee too. Examples of buyers paying the fee are Aragon, Valencia, Murcia and some agencies in Catalonia.

The Golden Rule: Never, ever pay a deposit directly to an agent. When you make an offer, you write a check (Assegno Circolare in Italy) made out to the SELLER. The agent holds it in trust. We have heard horror stories of buyers transferring €5,000 to an agent’s personal IBAN to “secure” a property, only for the agent to disappear. In Spain the small deposit can be paid to the Agency but the Arras 10-15% Deposit is usually transferred to the seller, where alternatively you can set up an escrow account can be set up by your attorney but this is a rare practice that has to be agreed with the selling party.

Conclusion

Buying property in Europe is not just a transaction; it is a legal process. Your real estate agent wants to close the deal. We want to make sure you don’t buy a liability. From calculating the true tax burden to translating the Notary deed, we are the safeguards between you and a bad investment.