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Taxes on Property Purchases

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Want to buy where the sun shines all year round, and make your dream come true?

In order to avoid any surprises, let’s review two expenses that are part of that extra amount that we must have available before buying an asset. When you buy a property, you have to pay a percentage to the tax authorities that will eventually make the purchase a little more expensive. Let’s see what the Transfer Tax and documented Legal Acts / Stamp duty is and how it works, also known by the acronym of ITP and AJD. The ITP (Transfer Tax) is an indirect tax that taxes the transmission of assets and rights in-between individuals. AJD (documented Legal Acts / Stamp duty) is another Indirect tax on the transmission of assets and rights in-between individuals. For example, when the purchased property is a new build, it will be subject to this tax.

Buying a home is an important step where many aspects need to be considered and it is important to plan the amount of taxes that we will have to pay. The base for calculating these amounts will be the price fixed and which should be included in the deeds. Please bear in mind that if the purchase price is lower than the tax value, the tax office will issue a complementary bill for the difference.


Purchase of a new build

In this case you will have to pay the seller the value added tax (VAT) 10% on the declared deeds value of the house. Also, you will be liable for the AJD which varies depending on the regional area where the property is located. In the Comunidad Valenciana it is 1,5 % and in the Murcia area 2 % . To make the payment, we must complete an official form and pay it through a Tax Administration bank account.

Purchase of a resale

In this case, you will have to take into account the transfer tax which again differs depending on the regional area. This tax will have to be liquidated in the same way as any other taxes.  So in the Comunidad Valenciana it is 10%, and in the Murcia area 8%


Who manages the payment of the taxes?

The payment of the taxes, the filling of the forms, the calculation of amount to be paid, the revision and the presentation will be done by the buyer or its representative. In any case, as a buyer you should note that: – The place where the tax is presented is the Tax Administration office of the respective area- In the Valencian area the payment must be done within 1 month from the following day of the signing of the deeds. In the Region of Murcia, the term will be 30 working days starting from the following day of the signing of the deeds. Delays may have penalties. – Payment of the above taxes is essential for the formal registration to be carried out at the corresponding Land Registry Office.

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