What taxes are you going to pay for the purchase of a property?
When it comes to buying a new property, one of the least attractive aspects for new owners is the payment of taxes corresponding to the acquisition of the property. Taxes usually represent in most cases 10% of the price of the house. A cost that is irrecoverable in relation to the investment, if we compare it with the investments made for remodeling or improvements to the property.
VAT or ITP?
The answer will depend on the seller and the house. If it is assumed that the purchase of a home is made for own use or rental, only VAT will be paid. Which corresponds to 10% of the price, or 4% if it is an officially protected home. On the other hand, if it is a new house, the same amount will be paid throughout Spain, with the exception of the Canary Islands.
In addition to VAT, the Documented Legal Acts (AJD), a modality of the ITP-AJD, must also be paid. The amount to be paid by AJD will depend on the location of the house: from 0.50% in the Basque Country and Navarra to 1.5% in Galicia, Aragon or Catalonia, going through 0.75% in Madrid.
It is very important to note that there are bonuses for newly built houses that are below a certain price. On the contrary, if it is the purchase of a house from an individual or what would be a used house, the tax that applies is the ITP, Onerous Patrimonial Transmissions (TPO) modality.
Onerous Asset Transfer Modality (TPO)
The TPO to pay for the purchase of a used house will depend on the Autonomous Community, the price and the fulfillment or not of certain requirements that have to do with the use that the buyer will give. In each Autonomous Community there are different rules, so it will be necessary to review all those that may apply.
Both TPO and AJD are self-assessed in the Autonomous Community, so it is important to apply the discount if it corresponds to the purchase. It must be taken into account that if the purchase is not previously presented by the Autonomous Community with the self-assessment, the title of the property cannot be registered in the Property Registry. You will not be able to register either if it is not proven that the transferor has declared the municipal capital gain.
What is the tax base of the ITP?
You need to be very careful on this point. Let us remember that the law for the prevention and fight against tax fraud contains a measure that not only fights against fraud, but also changes certain rules of the Administration. The base of this tax was set according to the real value that has been declared by the taxpayer in his self-assessment.
The reason for the change to the law was partly due to the way in which the Administration used to assess the value of the property (with statistical or comparative methods). Faced with this, the Supreme Court determined that the value of a property was not demonstrable by said method. It was necessary to visit the property in order to make an individualized and justified valuation.
Now the tax base is the reference value. It is a value set by the Land Registry based on statistical data, average prices reported and adapted (according to the law) to the individual characteristics of the property. However, this amount does not include the reforms carried out by the owner on the property.
The real condition for the payment of the IBI
There is also a real effect on assets due to tax debts imposed on previous transfers. These charges must be recorded in the Property Registry. However, these notes do not mean that the tax has been assessed and paid. On the contrary, they only indicate that the property is subject to payment if the settlement was not correct.
On the other hand, the Law establishes that the IBI for the current year must be paid by the owner on January 1, even if it is paid for the property throughout the year. The Supreme Court has ruled that the seller can pass on to the buyer the proportional part of the IBI for the days of the year that belongs to him. This point is important to agree on in writing expressly.
Finally, the obligation for the buyer to retain and deposit 3% of the price on account is also established. On the contrary, if it does not do so, the property is subject to the payment of said tax.