Understanding Spain’s Property Transfer Tax (ITP) When Buying Real Estate

If you’re planning to buy a property in Spain as a non-resident, it’s essential to factor in all associated costs—including the Property Transfer Tax (Impuesto de Transmisiones Patrimoniales, or ITP).

This tax applies to resale properties and is one of the most significant expenses you’ll encounter during the buying process. In this guide, we’ll break down what ITP is, how it’s calculated, and what non-resident buyers need to keep in mind.

What is the Property Transfer Tax (ITP)?

The ITP is a tax levied on the purchase of second-hand (resale) properties in Spain. Unlike new properties, which are subject to VAT (IVA) and stamp duty (AJD), resale properties fall under the scope of the ITP.

This tax is the responsibility of the buyer and must be paid within a specific timeframe after completing the purchase. Since ITP is a regional tax, each autonomous community in Spain sets its own rates and rules, which typically range between 6% and 10%.

How is ITP Calculated?

The amount of ITP owed is calculated based on the higher of either:

• The property’s declared purchase price, or
• The Valor de Referencia (Reference Value) assigned by the regional tax authority.

The Valor de Referencia is different from the cadastral value, as it is set by the government based on market data and is intended to reflect a fair market value for tax purposes.

The applicable tax rate varies by autonomous community, so it’s important to check the latest rates in the region where you’re buying.

Example Calculation:

• Property purchase price: €250,000
• Valor de Referencia: €260,000
• Regional ITP rate: 8%
• ITP due: €260,000 × 8% = €20,800

To ensure you’re using the correct rate, check the latest ITP rates applicable in the autonomous community where the property is located.

When and How to Pay ITP

The ITP must be paid within 30 working days from the date of signing the public deed of sale (escritura pública) before a notary. Late payment may result in penalties and interest charges.

Steps to Pay ITP:

• Complete the Modelo 600 tax form.
• Submit the form and pay the tax at the regional tax office or through an authorized bank.
• Provide proof of payment when registering the property with the Land Registry (Registro de la Propiedad).

Some regions allow online payments, while others require in-person submission. It’s always advisable to check with local authorities before proceeding.

Are There Any Exemptions or Reductions?

There are no full exemptions from ITP, but some buyers may qualify for reduced rates.

Potential Reductions (Region-Dependent):

• First-time homebuyers (under 35 years old) may be eligible for reduced rates, usually around 4%–5%.
• Buyers with disabilities or large families may also benefit from lower tax rates.
• Properties designated for affordable housing or specific social purposes could have tax advantages.

Important: These reductions typically apply only to tax residents in Spain. As a non-resident, you should plan for the full standard ITP rate in your region.

What Happens if I Don’t Pay ITP?

Failure to pay ITP on time can lead to legal and financial consequences. The Spanish tax authorities can impose:

• Late payment penalties and interest on the outstanding amount.
• Restrictions on registering, selling or transferring ownership of the property until the tax is settled.

Although non-payment does not invalidate the purchase itself, it may cause complications in the future, especially if you plan to sell or rent out the property.

Factor ITP Into Your Budget

When purchasing property in Spain, it’s crucial to consider all acquisition costs, including ITP, legal fees, notary costs, and land registry fees. Budgeting for these expenses from the outset will help you avoid unexpected financial burdens later.

Simplifying Non-Resident Tax Compliance

At IberianTax, we make tax compliance easy for non-resident property owners in Spain. Our platform helps you stay on top of essential tax obligations such as:

• Modelo 210 (imputed income tax for personal-use properties and rental income tax).
• Capital gains tax when selling property.

By automating filings and providing clear guidance, we ensure your taxes are handled correctly and on time—so you can focus on enjoying your property stress-free.

Sign up for free tax deadline reminders and never miss an important filing date. Create a free IberianTax account today!