However, some housing transactions may be subject to the Transfer Tax (ITP) instead of VAT. What does this depend on? In this article, we explain everything you need to know about ITP and VAT in home purchases.
The VAT on the acquisition of a new home
The Value Added Tax (VAT) applicable to the purchase of a new construction home is 10% of its notarized value. This percentage is reduced to 4% if it is a social housing or public promotion, although it may vary depending on the Autonomous Community.
In addition, a VAT of 10% applies to annexes acquired along with the new construction home, such as parking spaces (up to a maximum of two) and the storage room.
How much is the VAT for a home if one builds it oneself?
Those who build their own home must pay the VAT corresponding to self-promotion. A person acting as a self-promoter (something common in the case of prefabricated houses, for example) will pay a VAT of 10% on all invoices that include labor and materials. However, if the self-promoter purchases the construction materials themselves, they must pay a VAT of 21%.
In addition, the VAT applied to the purchase of the land, the technical project, and the hiring of the architect, surveyor, geotechnical study, and transportation, among other services, will also be 21%.
Who pays the VAT for the home?
The buyer of the house is responsible for paying the VAT at the time of the property transfer, i.e., when the deeds are signed.
The Transfer Tax (ITP) on the purchase of a second-hand home
When buying a second-hand home, no VAT is paid. Instead, the Transfer Tax (ITP) must be paid.
The ITP must be paid by the buyer, who must submit model 600 self-assessment to the Tax Office corresponding to the location of the house. The deadline for this procedure is 30 days from the signing of the sales deed.
When is tax paid for ITP?
The Transfer Tax (ITP) is applied when real estate or movable property is transferred or sold between individuals, or when real rights, loans, bonds, rentals, pensions, and certain administrative concessions are established.
When is it advantageous to pay VAT instead of ITP when buying real estate?
In general, one cannot choose which tax to pay. The possibility of paying VAT in the purchase of homes or second-hand properties exists only if the seller is subject to VAT. If the seller is an individual (not a business owner), ITP is applied, without the option to choose VAT.
What is the Stamp Duty?
The Stamp Duty (AJD) taxes notarial, commercial, and administrative documents. In the purchase of homes, the relevant modality is that of Notarial Documents, which includes two fees:
- A fixed fee of 0.30 euros per sheet and 0.15 euros per page for stamped paper.
- A variable fee, which is applied to deeds registerable in the Property Registries and varies depending on the Autonomous Community, ranging from 0.5% to 2%.
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