What 2026 tax and deposit pitfalls should European buyers avoid?

European buyers in Costa del Sol for 2026 should be acutely aware of specific tax and deposit pitfalls. Firstly, misunderstanding the tax implications is a major pitfall. While Spain is part of the EU, specific regional and national taxes on property acquisition can be complex and differ from a buyer's home country. These include property transfer tax (ITP) for resale properties, which varies by region but can be substantial, or VAT (IVA) for new builds, accompanied by stamp duty (AJD). Buyers often underestimate these additional costs, which can add 8-12% to the purchase price. Failing to budget adequately for these can lead to financial strain or even the inability to complete a purchase. Secondly, mismanaging the deposit process can lead to significant losses. In Costa del Sol, a non-refundable reservation deposit is typically paid to secure the property, often 6,000-10,000 euros. This is followed by a larger private purchase agreement (PPA) deposit, usually 10% for resale properties and up to 30% for new builds or off-plan properties. A common pitfall is not ensuring legal due diligence is completed *before* committing to these deposits. If a buyer places a deposit without a lawyer verifying the property's legal status, potential debts, or planning permissions, they risk losing their deposit should an issue arise. For new builds and off-plan properties, another pitfall is not ensuring developer guarantees (like bank guarantees or insurance policies) are in place to safeguard deposits against construction delays or developer insolvency. Spanish law mandates these protections, but verifying their existence and validity is crucial. Without these, buyers could lose substantial funds if the project fails to materialize. Understanding these tax obligations and meticulously managing the deposit stages with legal counsel are paramount to avoiding costly mistakes.