How to calculate transfer tax on Spanish property

Property taxes

Transfer tax on Spanish property can be as high as 10% and, as a result, makes up one of the highest costs involved in a purchase. In this blog post, we look at how to calculate this tax, how much you need to pay and which buyers are exempt. 

What is transfer tax? 

Known as the Impuesto sobre Transacciones Patrimoniales (ITP), transfer tax is levied on the purchase of resale property, cars and capital increases. It’s a regional tax, and, as such, each autonomous region in Spain applies its own rate. 

Consequently, the amount you pay depends on where you buy a property in Spain. For example, in Andalusia, transfer tax on Spanish property is levied at a flat rate of 7%. In the Comunidad Valenciana, however, it stands at 10%. 

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How do you calculate transfer tax on Spanish property?

For transfer tax purposes, the value of the property is determined in two ways: 

  • The value in the Cadastral Registry. 
  • The price declared in the title deeds. 

The higher of the two values is the figure used. For example, if you pay €190,000 for a property and declare this value in the title deeds, but the Cadastral Registry determines its value is €210,000, you pay transfer tax on €210,000. 

You then apply the rate of transfer tax on the value. As a result, the tax on a resale property valued at €210,000 on Costa de la Luz (7% transfer tax in Andalusia) would be €14,700. Transfer tax on a property with the same value on the Costa Blanca (10% transfer tax in the Comunidad Valenciana) would be €21,000. 

Who pays transfer tax?

The buyer in all cases.

Find out more about fees and taxes when you buy property in Spain

Are there any exemptions? 

No buyer is 100% exempt from transfer tax. However, many regions in Spain apply lower rates in certain circumstances. For example, first-time buyers, buyers under 35, buyers with disabilities, etc. In these cases, the transfer tax is usually 4%. 

Note, however, that these reduced rates are always for residents in Spain and do not apply to non-residents. 

What about if I buy a new property?

If you buy a new property, i.e., you are the first owner of it, you are not liable for the transfer tax. However, you must pay VAT (IVA) at a flat rate of 10%, applied throughout Spain, regardless of the region. 

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