Property Transfer Tax (ITP): what it is, how much it costs, and when to pay it

What is the Property Transfer Tax (ITP)?

The ITP, or Property Transfer Tax, is a levy that applies to the transfer of assets between individuals. It is regulated by Royal Legislative Decree 1/1993, the Law on Property Transfer Tax and Documented Legal Acts, and it varies depending on the autonomous community in which you are located.

When do you have to pay the Property Transfer Tax (ITP) for a home?

The ITP must be paid —by the future owner— when purchasing a second-hand property. In the case of a new-build home, it is the VAT (Value Added Tax) that must be paid instead.

According to the Mortgage Law, even though the bank covers the costs of the mortgage deed, it is still the buyer who must pay this tax. Meanwhile, the seller is responsible for other taxes, such as the municipal capital gains tax.

Having the support of a real estate agent is essential to understanding these details and fulfilling your legal and tax obligations. Contact our team and make sure you are fully informed about all the procedures involved in buying or selling a property.

When and where do you pay the ITP?

Buying or selling a property is not a simple transaction between individuals. It involves complying with legal obligations, such as paying taxes, in order to avoid conflicts and penalties later on from the Tax Agency. Here are some of the most relevant facts you should know:

When is the Property Transfer Tax (ITP) paid?

You have a limited timeframe to pay the ITP: 30 business days from the signing of the property purchase agreement. The autonomous communities manage this process, so you will need to go to the relevant regional tax office.

What happens if the Property Transfer Tax is not paid?

If the ITP is not paid within the established timeframe, the tax authority in your region will likely contact you to pay it, along with late-payment interest. In fact, you may also be fined. To avoid this, make sure you meet all deadlines.

Where is it paid?

This tax can be paid at the time of purchase before a notary. Alternatively, you can handle the process yourself at the Tax Agency office of your autonomous community.

How much does the ITP cost?

The Property Transfer Tax (ITP) is not a fixed amount, but a variable tax that depends on three factors:

• The value of the asset: Since 2022, the taxable base of the ITP is calculated based on the cadastral reference value, which is determined annually and can be consulted on its Electronic Headquarters. If the declared purchase price is higher than the reference value, the higher of the two will be used as the taxable base.

• Tax rate according to the autonomous community: Each region applies a specific percentage on the property value. This percentage ranges between 6% and 11%.

Exemptions: According to the aforementioned Royal Legislative Decree 1/1993, there are certain situations in which the ITP does not need to be paid, or only a portion of it must be paid.What is the Property Transfer Tax (ITP)?

The ITP, or Property Transfer Tax, is a levy that applies to the transfer of assets between individuals. It is regulated by Royal Legislative Decree 1/1993, the Law on Property Transfer Tax and Documented Legal Acts, and it varies depending on the autonomous community in which you are located.

When do you have to pay the Property Transfer Tax (ITP) for a home?

The ITP must be paid —by the future owner— when purchasing a second-hand property. In the case of a new-build home, it is the VAT (Value Added Tax) that must be paid instead.

According to the Mortgage Law, even though the bank covers the costs of the mortgage deed, it is still the buyer who must pay this tax. Meanwhile, the seller is responsible for other taxes, such as the municipal capital gains tax.

Having the support of a real estate agent is essential to understanding these details and fulfilling your legal and tax obligations. Contact our team and make sure you are fully informed about all the procedures involved in buying or selling a property.

When and where do you pay the ITP?

Buying or selling a property is not a simple transaction between individuals. It involves complying with legal obligations, such as paying taxes, in order to avoid conflicts and penalties later on from the Tax Agency. Here are some of the most relevant facts you should know:

When is the Property Transfer Tax (ITP) paid?

You have a limited timeframe to pay the ITP: 30 business days from the signing of the property purchase agreement. The autonomous communities manage this process, so you will need to go to the relevant regional tax office.

What happens if the Property Transfer Tax is not paid?

If the ITP is not paid within the established timeframe, the tax authority in your region will likely contact you to pay it, along with late-payment interest. In fact, you may also be fined. To avoid this, make sure you meet all deadlines.

Where is it paid?

This tax can be paid at the time of purchase before a notary. Alternatively, you can handle the process yourself at the Tax Agency office of your autonomous community.

How much does the ITP cost?

The Property Transfer Tax (ITP) is not a fixed amount, but a variable tax that depends on three factors:

• The value of the asset: Since 2022, the taxable base of the ITP is calculated based on the cadastral reference value, which is determined annually and can be consulted on its Electronic Headquarters. If the declared purchase price is higher than the reference value, the higher of the two will be used as the taxable base.

• Tax rate according to the autonomous community: Each region applies a specific percentage on the property value. This percentage ranges between 6% and 11%.

Exemptions: According to the aforementioned Royal Legislative Decree 1/1993, there are certain situations in which the ITP does not need to be paid, or only a portion of it must be paid.

Common exemptions when paying the Property Transfer Tax

• You may be exempt from paying the ITP, or eligible for a reduction, depending on the autonomous community and provided that one of the following situations applies:

  • Purchase of subsidised housing (vivienda protegida).

  • Inheritance or donation of a property.

  • Purchase of a newly built home sold at public auction.

  • Being under 35 or 40 years old: this is just one of the available aids for young people buying a home.

  • Purchase of a first home.

  • Having a disability.

  • Being part of a large family.

  To fully understand your specific situation and the rights you may access, rely on a qualified real estate agent, like those at Engel & Völkers. Make the process easier and worry-free.

  How to settle the ITP for a property

  Settling this tax is a simple process that you can carry out either in person or online through the Tax Agency of your autonomous community, if you choose to do it yourself. To do so, you must follow these steps:

  Fill out form 600

  First, you must fill in Form 600. Although each autonomous community has its own procedure, the process is similar across all, and the form is the same.

  You will need various data such as:

  • Personal details of the buyer and seller (or landlord and tenant in the case of a rental).

  • Date of the contract or deed of the property.

  • Type of transaction: sale, rental, etc.

  • Value of the property or taxable base (actual price or reference value, whichever is higher).

  • Applicable ITP rate according to your autonomous community.

  Documents required to settle the ITP

  • Simple copy of the deed of sale.

  • ID of the buyer and seller.

  • Proof of the cadastral reference value (if applicable).

  • Duly completed Form 600.

  Where to file

  As mentioned above, the documentation must be submitted to the Tax Office either in person or online. Once the request is processed, you will receive a payment receipt to complete the payment at the corresponding bank.

  Tips for paying the Property Transfer Tax (ITP)

  To avoid mistakes when paying the ITP for your property, we recommend you follow these tips:

  • Check the applicable rate in your case: remember that each autonomous community applies a different percentage.

  • Keep deadlines in mind: you only have 30 working days to pay it. Failing to do so on time will result in a late payment surcharge.

  • Make sure to pay it even if it's a rental: this type of transaction is not exempt from this tax either.

  • Consult an expert: having professional advice will help you understand all the procedures and taxes you must comply with to stay within the law.

  Engel & Völkers guides you through the home-buying process

  As you can see, buying or selling a property involves many steps and procedures, as well as taxes that must be paid. Carrying out the transaction between private individuals without knowing the details—such as paying the Property Transfer Tax (ITP)—can lead to mistakes.

  At Engel & Völkers, we are not only experts in the luxury real estate sector. We make sure our clients receive the most comprehensive advice on the market to avoid any issues.

  Get in touch with our qualified agents and let us guide you through the entire buying process—from finding your dream home to moving in. Shall we talk?