Each time a property is transferred from one person (physical or legal) to another, the transaction attracts an Impuesto Sobre Transmisión de Patrimonio (I.T.P.). Or, in English, Tax on the Transfer of Wealth.

This tax is payable by the buyer and is levied by the Autonomous Region level of government. In the case of Andalucia it is the Junta de Andalucia who levies it. Purchase Tax (ITP) in Andalucía – What Buyers Should Know

When you buy a resale (second-hand) property in Andalucía, you pay ITP – Impuesto sobre Transmisiones Patrimoniales. This is one of the main purchase costs and it is paid shortly after completion.

The good news is that in October 2021 Andalucía made this tax much cheaper and much simpler than it used to be.

For many years, Andalucía used a progressive system where the tax rate increased as the price increased:

• 8% on the first €400,000
• 9% on the part between €400,000 and €700,000
• 10% on anything above €700,000

This meant:

• More expensive properties were penalised
• The calculation was needlessly complicated
• Total tax bills were often surprisingly high

There were some reduced rates, but they were very limited and only applied to low-priced properties and specific buyer groups. Since late 2021 the rate of I.T.P. in Andalucia has been a flat rate 7%.

What this means in practice

• Most buyers now pay significantly less tax than before
• Expensive properties benefit especially strongly
• The system is now simple, predictable, and easy to budget for

On top of the 7% general rate, Andalucía offers generous reductions in certain situations.

6% rate

You may qualify for 6% if:

• The property will be your main residence, and
• The purchase price is up to €150,000

3.5% super-reduced rate

You may qualify for just 3.5% if the property is your main residence and you are:

• Under 35, or
• Officially disabled, or
• A large family, or
• A victim of domestic violence or terrorism, or
• Buying in a municipality at risk of depopulation

The price limits are:

• Up to €150,000 for most of these categories
• Up to €250,000 for buyers with disability or large families

Compared to the old system, Andalucía is now one of the cheapest regions in Spain for purchase tax, the tax system is more buyer-friendly, and purchase costs are lower, clearer, and easier to plan for.

For many buyers, this reform represents a saving of many thousands of euros compared to a few years ago.

Reducing the Tax

There is a legitimate way to reduce at least some of this tax!

If the property you are buying includes furniture or equipment of any sort, it is highly advisable to make a separate contract for this element, which will then reduce the amount declared in the escritura and, consequently, the tax payable.

Purchases of furniture and other moveables are taxable but attract tax at the lower rate of 4%.

Furthermore, contracts for sale of moveable goods such as this are not required to be notarized or registered. Clearly, valuations must be reasonable and take into account the true value of the goods acquired, but it makes sense to separate the two elements if you are acquiring anything in addition to the physical structure of the building.

Source: Junta de Andalucía: Consejería de Hacienda y Administración Pública.