Property Transfer Tax (ITP) is a tax applied in Spain to the transfer of property and rights. It plays a key role in various economic transactions, including the purchase of homes, the acquisition of vehicles, and the transfer of inheritances.
In this guide, we explain the key aspects related to ITP, including how it is calculated, who is required to pay it, the deadlines and payment procedures, and the consequences of non-compliance.
The Property Transfer Tax (ITP) is an indirect tax applied to the transfer of property and rights between private individuals. It applies to various transactions, including the purchase of homes, vehicles, and certain corporate transactions. It is generally calculated as a percentage of the actual value of the asset acquired.
This tax is collected and regulated by the Autonomous Communities, which is why applicable rules and tax rates vary depending on the region where the transaction takes place.
As mentioned above, the tax burden may vary significantly depending on the Autonomous Community where the transaction takes place.
On the other hand, when calculating the ITP, you must take into account that each Autonomous Community may offer exemptions and reduced rates that could benefit you.
The general ITP rates in each Autonomous Community are as follows:
Autonomous Community
Ceuta / Community of Madrid / Melilla / Navarre: 6%
Canary Islands: 6.5%
Andalusia / La Rioja / Basque Country: 7%
Galicia / Murcia: 8%
Aragon / Asturias / Castile and León: 8%–10%
Extremadura: 8%–11%
Balearic Islands: 8%–13%
Cantabria / Castile–La Mancha: 9%
Catalonia / Valencian Community 10-11%
An 8% rate applies to publicly subsidized housing (VPO) that qualifies as a primary residence, and to the purchase of a primary residence by individuals under 35 years of age with taxable income of up to €25,000 individually or €40,000 jointly.
A 4% rate applies to publicly subsidized housing (VPO) under a special regime, as well as to large families, victims of gender-based violence, and single-parent families with a taxable income base of up to €30,000 individually or €35,000 jointly. For special large families, the joint income threshold increases to €58,000.
A 4% rate also applies to the primary residence of persons with disabilities of at least 65%.
A 5% rate applies to primary residences purchased by large families, single-parent families, persons with disabilities, or young buyers up to 32 years of age, provided their taxable income does not exceed €36,000.
A 4% ITP rate applies to the primary residence of large families. If the buyers previously owned another home, they must sell it within two years.
A 4% rate applies to special-regime publicly subsidized housing. A 3% rate applies to the purchase of a primary residence with a larger surface area (10% more usable floor space) for large families with taxable income below €44,000. A 3% rate also applies to individuals with disabilities of at least 65%, with taxable income below €40,000 and taxable savings income below €1,800.
A 4% rate applies to primary residences purchased by individuals under 36 years of age, large families, and persons with disabilities of at least 65%, as well as to publicly subsidized housing under certain income limits. A reduced rate of 0.01% applies to individuals under 36 purchasing in municipalities with smaller populations.
A 5% rate applies to publicly subsidized housing (VPO) and to first homes purchased by individuals under 36 years of age. In both cases, it applies to taxable income of up to €18,030 for individuals or €30,050 jointly, with taxable savings income not exceeding €1,800. A 5% rate also applies to people with disabilities of at least 33%, to large families, and to families whose taxable income does not exceed €30,600 if the property is purchased within five years of obtaining large-family status or having a child.
One of the most common areas of confusion in taxation is the distinction between Property Transfer Tax (ITP) and Value Added Tax (VAT). Both are indirect taxes, but they have different characteristics and apply in different situations.
VAT applies to the supply of goods and services in the course of economic activities, mainly affecting commercial transactions.
ITP, applies to property transfers between private individuals, such as the sale of property between individuals.
VAT has a standard rate of 21% and reduced rates 10% and 4%, which apply to most taxable transactions.
The ITP, on the other hand, varies by Autonomous Community and generally ranges from 6% to 11%.
VAT applies to transactions carried out by entrepreneurs and professionals.
The ITP applies to transactions between individuals, although there are exceptions for transactions carried out by companies.
In summary, VAT is a tax that applies to economic and commercial activities, while ITP focuses on transfers of property and property rights between individuals.
The State establishes the general framework governing Property Transfer Tax; however, the Autonomous Communities have the authority to set the applicable tax rates. Therefore, the final amount payable depends on the type of property and the regulations of the corresponding Autonomous Community.
In property transfers, the minimum ITP rate is generally 6%. If the transaction involves movable property, the minimum rate is 4%. In cases involving the creation of real rights as security interests, the minimum rate is 1%. This rate also applies to certain corporate transactions, such as capital increases.
The amount payable for Property Transfer Tax varies depending on the Autonomous Community, as this tax is collected by the regional tax authority of the Community where the property is located.
To determine how much ITP (Property Transfer Tax) must be paid on a property, the taxable base used for the calculation is determined by the higher of the declared purchase price or the market reference value established by the General Directorate of Cadastre. The taxable base does not allow deductions.
In general terms, the key points to consider when calculating the ITP for a home are as follows:
Keep in mind that these percentages vary by Autonomous Community, so you should verify the applicable rate based on where the transaction takes place.
Calculation example:
Let’s assume a person buys a property for €200,000 in Madrid. If the tax rate is 6%, the ITP calculation would be as follows:
ITP = €200,000 × 6% = €12,000
Therefore, the buyer must pay €12,000 in Property Transfer Tax (ITP).
You may be interested in: Property Transfer Tax (ITP).
The obligation to pay ITP falls on the individual or legal entity that acquires a second-hand property. Transactions involving newly built homes are subject to VAT instead. It is important to clarify that although the buyer and seller may agree on who will make the payment, the legal responsibility ultimately lies with the buyer.
In the case of purchasing a property, the buyer is responsible for paying the ITP. In the case of renting a property, the tenant is responsible for paying the ITP.
It should be noted that in some Autonomous Communities there are exemptions or reductions in ITP for certain groups, such as young buyers, large families, or people with disabilities. For this reason, it is essential to review the specific regulations of each Autonomous Community to determine whether you qualify for any tax benefits.
The ITP is paid before signing the public deed of sale, so it is important for the buyer to bear this tax in mind and include it in their budget when planning to purchase the property. The buyer submits a declaration to the Tax Administration of the autonomous community where the property purchase transaction took place. They must use form 600 to complete the details of the transaction and submit it together with the corresponding payment.
The deadline for paying the ITP is 30 business days from the date of the deed of sale. If this deadline is not met, surcharges and interest will apply.
On the other hand, as it is a state tax, it must be paid at the competent office of the corresponding Autonomous Community.
The ITP is a state tax paid through the Tax Agency officeof the corresponding autonomous community. Each region has its own procedures and platforms for managing the tax, so it is important to verify where and how to submit your self-assessment.
The tax can be paid in person or online, using electronic means, thus facilitating the process for taxpayers.
Generally, ITP must be paid in a single installment, although some autonomous communities offer the possibility of splitting the payment into several installments, considering those taxpayers who may face financial difficulties when paying the tax.
Those interested in agreeing to this option must submit an application to the Tax Agency of the autonomous community and comply with the established requirements. It is essential to find out about the specific conditions and deadlines for payment in installments, as these vary according to the regulations of each community. Likewise, the granting of payment in installments entails the obligation to pay the corresponding interest on arrears .
Failure to pay the Property Transfer Tax (ITP) can lead to serious consequences. The competent office of the respective Autonomous Community will normally initiate an inspection procedure, usually accompanied by a penalty. Failure to pay the tax is considered a tax offense and may result in financial penalties.
Consequently, the competent authority will require payment of the outstanding tax amount, the corresponding late-payment interest, and, in addition, a penalty on the regularized tax liability.
For all these reasons, and to avoid these inconveniences, it is advisable to file your tax return or self-assessment within the established deadline and make the corresponding payment.
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If you are considering a transaction that involves the ITP (Property Transfer Tax), we recommend informing yourself about the specific regulations in your autonomous community and, if necessary, consulting a professional who can guide you through the process. Paying the ITP is not only a legal obligation but also a way to contribute to the development and well-being of the community in which you live.
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