When you first start looking to buy a property in Spain the term “ITP” might pop out. But, What is ITP?
Second hand properties are not charged with VAT (IVA in Spanish), however these resales come across with a tax called ITP “Impuesto sobre Transmisiones Patrimoniales”, which is a transfer Tax set at autonomous community level.
As this tax is ceded to the autonomous regions it varies across the country, being around 6% in Communities such as Madrid or The Canaries Island and 10% in others as Catalonia or Valencia.
ITP applies to all real estate, with just a difference in ranges of prices in the garages. You will have to take this expense into consideration when looking at your budget, as this tax is not usually included in the price shown in the advertisings.
UPDATE 28/04/2021: Andalusia has reduced the ITP rates, from the previous 8%, 9% and 10% (see table below) to a unique general rate of 7% for all resale properties. Meaning that now, buyers would be paying less taxes for a second home. This is valid until 31st December 2021.
The following table shows the ITP rates for Andalucia (2020) :
The ITP tax is accumulative, meaning that the first 400.000€ are charged at 8%, and the rest that overpass that amount will be charged at the pertinent percentage. As an example, a property of 1.500.000€ will be charged as followed:
** The second section is the amount between 700.000 €- 400.000 € = 300.000 € charged at 9%
*** 1.500.000€ – 700.000€ = 800.000€ Charged at 10% as per the third section of the tax regulation.
This tax must be paid by the buyer within the next 30 days after the purchase of the property.
This tax is not “stamp duty” as we know it in the UK. There is a form of stamp duty in Spain called AJD (Actos Juridicos Documentados) on all notarization of documents. AJD is only payable on land and new property sales. The rate can be up to 1.5%.
UPDATE 28/04/2021: Andalusia has reduced the AJD from 1.5% to 1.2%. This percentage applies until 31st December 2021.
From Andalucia Realty, we understand that the process of buying a new property and the taxes related to it might be confusing for first time buyers. Therefore we advise and help our clients before, during and after the purchase, and our team of experts will take care of guiding you through all the process.