12 Mistakes in a Real Estate Project Calculation and How to Find Them

A real estate project calculation is most often broken by twelve omissions: purchase taxes and closing costs, the wrong ITP base, IVA on renovation, holding costs, no reserve, loan interest, a sale price taken from listings, selling costs, capital gains tax, ignoring the term, ignoring inflation, and a single scenario. In this article's worked example they turn a profit of €170,000 into €71,400. Below is each mistake and how to check for it.

What the consequence looks like: one example

Worked example, not a forecast. Purchase for €400,000, renovation of €70,000, sale for €640,000 after 18 months. The calculation on the first line gives €170,000, which is 36% on €470,000. Then the omitted items are added.

The result is €71,400, or 13.1% on the €543,000 invested. Capital gains tax is not yet in the calculation, and it depends on the seller's status. The same numbers are used in the article on how to calculate a project's return.

Mistakes in costs

1. Profit as "sale minus purchase". The table above shows that leaving out entry taxes, the reserve, holding and selling costs eats more than half the result. Calculate on all of the project's costs, not on the price of the property.
2. ITP on the contract price. The tax base for real estate transfers in Catalonia is the greatest of three values: the valor de referencia (the reference value set by the tax authority), the value declared in the document, and the transaction price (art. 10.2 TRLITPAJD; the same order is in the Agència Tributària de Catalunya guide, section B.5.2). If the valor de referencia is €450,000 against a price of €400,000, ITP at 10% comes to €45,000, not €40,000. The base (valor de referencia) needs to be checked before the arras (the deposit contract).
3. IVA on renovation taken as the reduced 10% or as a recoverable tax. The reduced 10% rate applies if the client is an individual who uses the home for themselves, does not let it and does not run a business there, plus restrictions on the age of the building and the materials (AEAT, which IVA rate applies to works in dwellings). For an investor who renovates in order to sell, this usually does not fit. In the calculation 21% is more often assumed, and the question of deduction is addressed to an asesor fiscal (tax adviser): see the article on IVA on renovation for a company.
4. No holding costs. IBI (the property tax), comunidad (owners' association fees), utilities and insurance run for the whole term, including the months of renovation.
5. No contingency reserve. A renovation estimate on an old building almost never comes out to the cent. How the size of the reserve is chosen is described in a separate article.
6. Loan interest not deducted. Worked example: a loan of €270,000 at 4% for 18 months costs €16,200. Profit falls to €55,200, and ROI on own capital of €273,000 comes to 20.2%. A market reference point: the indicator of the cost of new loans to non-financial corporations in the eurozone was 3.77% in August 2026 (ECB, Banco de España translation, 1 October 2026). It is not the rate on your loan.

Mistakes in sale price, taxes and term

1. Sale price taken from listings. A listing shows what the seller wants, not a transaction. The INE housing price index is built from administrative registers and covers more than 95% of housing sales in a quarter (INE, Índice de Precios de Vivienda). Where the gap comes from is covered in the article on asking price and closing price.
2. Selling costs and plusvalía municipal. Commission, certificates, the cédula de habitabilidad and legal support go into costs. Plusvalía municipal (the municipal tax on the increase in land value) is paid by the seller on a sale for consideration (art. 106.1.b TRLRHL); if the seller is a non-resident individual, the buyer pays the tax as a substitute taxpayer (art. 106.2), so the amount is put into the calculation in advance.
3. Capital gains tax not calculated, or someone else's rate used. A non-resident pays 19% on the gain (art. 25.1.f TRLIRNR), a resident pays under the savings scale, a company under impuesto sobre sociedades (corporate income tax). More on the non-resident: IRNR on a sale.
4. ROI without a term. 13.1% over 18 months equals 8.6% a year, while the same 13.1% over four years would give 3.1% a year. For different terms, look at IRR: how it works and where it misleads.
5. No comparison with an alternative or with inflation. According to INE's flash estimate of 29 September 2026, annual IPC was 4.9% (INE). A nominal result without this adjustment reads as overstated: see the article on real return.
6. A single scenario. A calculation in which everything goes to plan does not answer the question of at what sale price the project turns into a loss. In the example the threshold is €565,625, a margin of 11.6%, and a renovation that costs 20% more shifts it by €14,600: how to calculate this is described in the article on the break-even point.

On taxes that are changing

Since 8 October 2026, Real Decreto-ley 29/2026 of 6 October (BOE-A-2026-20823) has been in force, affecting IRPF, IVA, IBI and plusvalía. The previous housing act, 26/2026, was not ratified by Congress, so the fate of the new one is not yet known. The calculations in this article do not take its provisions into account. Before a deal, check the rules with an asesor fiscal.

Who this checklist will not help

It does not replace an estimate, due diligence on the property or a calculation for your tax status. A property held for long-term rent needs different arithmetic: net rental yield. A deal with a loan and an operator's fee adds deductions, and the project's result differs from the investor's result.

You can check your own figures in the investor calculator, and the principles of calculation are described on the /methodology page.