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Real estate transfer tax

The property transfer tax in Madrid or in any other Autonomous Community is a tax that must be paid when registering a property at the Land Registry. From the moment a house is purchased and the notary is consulted in order to grant the deed, the buyer is subject to payment of a certain amount based on the real value of the property. The payment of this tax is compulsory and in the event of non payment, the owner will face tax penalties and many other implications, such as not granting the change of title in the Land Registry.


This is the so-called ITP / AJD and is not only valid in the case of property but it is also payable on vehicles and other movable property as well as all kinds of assets, leases, loans, pensions, shares or administrative concessions that form part of the assets of persons. In any case, if these operations affect a business or professional activity, they will not be subject to the ITP tax and will be taxed by VAT or Value Added Tax unless the business owner is exempted from paying VAT.


Madrid - Impuesto de transmisiones patrimoniales

Foto: © Engel & Völkers Madrid

Every Autonomous Community will impose a certain tax amount which, in addition, will depend on the value of the property, its nature of use and the personal characteristics of the buyer. In this way, the transfer tax on capital transmissions in Madrid will be fixed according to the community itself will apply a specific percentage based on what has been ruled by the government, as there are some state minimums that have to be met. In the case of real estate, this stands at 6%, if the transmission is movable property, it will be 4% and 1% in the case of rights of guarantee.


All these transactions related to purchasing real estate or furniture must be filed in the town where they are located or where the purchaser has his fixed address and pay the corresponding tax in any tax office of the Mortgage District of Madrid or any other community. Otherwise, you can file for the tax electronically without having to make any trips. The presentation period will be 30 working days from the formalisation of the contract subject to tax.
Following the case in hand, the latest news reveals that the Ministry of Finance has decided to adjust the tax on capital transfers in the case of property in order to balance it with the real market price. In this way, rates have been lowered after the real estate bubble burst in Spain.

The tax situations that were being generated were tremendously unfair and the families began to resort to valuations based on the depreciation of their homes. Thus, a different calculation system has been established taking into account some factors such as the use of the property, its height, and the district in order to avoid this type of circumstance that worked in the favour of the Administration not not families.

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