Property Transfer Tax (ITP) in Spain Explained

The Impuesto de Transmisiones Patrimoniales (ITP), or Property Transfer Tax, is one of the most significant costs when buying a resale (second-hand) property in Spain. Unlike new-build properties, which are subject to VAT (IVA), resale properties are subject to the ITP. Understanding this tax is crucial for budgeting your property purchase correctly.

How the ITP Works

The ITP is paid by the buyer and is calculated as a percentage of the property's declared purchase price or the fiscal value assessed by the tax authorities, whichever is higher. The tax must be paid within 30 business days of signing the escritura (title deed) at the notary. The payment is made to the regional tax office (Hacienda Autonómica) of the autonomous community where the property is located.

ITP Rates by Region

Spain's autonomous communities set their own ITP rates, which is why the tax varies significantly depending on where you buy. Andalusia charges 7%. The Balearic Islands use a progressive scale from 8% to 13% depending on value. Catalonia applies 10%. The Valencia Community charges 10%. Madrid applies 6%, making it one of the most affordable regions for this tax. The Canary Islands charge 6.5%. Galicia applies 9%. The Basque Country charges 4% in some provinces. These rates can change, so always verify the current rate for your specific region.

Fiscal Value vs. Purchase Price

Since 2022, Spain introduced the "valor de referencia" system, where the tax authorities establish a reference value for each property based on market data. If the reference value is higher than your purchase price, you will be taxed on the reference value instead. This measure was introduced to combat the historical practice of undervaluing properties in purchase contracts to reduce tax liability. You can check the reference value of any property through the Catastro website.

Reduced Rates and Exemptions

Several regions offer reduced ITP rates for specific circumstances. First-time buyers under a certain age (typically 32 or 35) may qualify for reduced rates. Buyers purchasing their primary residence below a certain price threshold may also benefit. Large families (familias numerosas) often receive reductions. People with disabilities may qualify for lower rates. Each region has its own criteria, so consult a local tax advisor. Browse verified properties on Nuevolista and factor in the ITP when calculating your total purchase budget.

ITP vs. IVA: Which Tax Applies?

The distinction is straightforward. Resale properties from a private seller are subject to ITP. New-build properties purchased from a developer are subject to IVA (currently 10% for residential properties) plus AJD (Actos Jurídicos Documentados, or stamp duty) at typically 0.5-1.5% depending on the region. You cannot choose which tax applies — it depends entirely on the nature of the transaction.

How to Pay the ITP

Payment is typically handled by your lawyer or gestoria as part of the purchase process. They will complete form 600, calculate the correct amount, and submit the payment to the regional tax authority. Keep all receipts, as you will need proof of ITP payment for the Land Registry to register the property in your name. Search apartments for sale on our platform — Nuevolista helps buyers understand all costs involved in purchasing property in Spain.