Understanding the Property Transfer Tax (ITP) in Spain: A Comprehensive Guide

The Property Transfer Tax (Impuesto de Transmisiones Patrimoniales, or ITP) is a crucial consideration for anyone looking to purchase a second-hand property in Spain. This tax varies significantly depending on the autonomous community where the property is located, making it essential for potential buyers to understand the applicable rates and any available exemptions or reductions.

What is the Property Transfer Tax (ITP)?

The ITP is the primary tax levied on the transfer of property ownership in Spain, particularly for second-hand homes. Unlike new properties, which are subject to Value Added Tax (VAT), second-hand properties are taxed under the ITP framework. The rates can range from 6% to 13%, depending on the region, and various reduced rates may apply under specific circumstances.

How is ITP Calculated?

The ITP is calculated by applying a percentage to the cadastral reference value of the property. This value is determined by the local authorities and reflects the property’s estimated market value. Each autonomous community has the authority to set its own ITP rates within a national framework, which means that the location of the property is a significant factor in determining the tax amount.

General Rate Overview

• Andalusia: 7%
• Aragon: Rates vary based on property value, ranging from 8% to 10%.
• Asturias: 8% for properties up to €300,000, increasing to 10% for properties over €500,000.
• Balearic Islands: Rates range from 8% to 13% based on property value.
• Canary Islands: 6.5%, dropping to 5% for main homes under specific conditions.

Regional Breakdown of ITP Rates

Andalusia

In Andalusia, the general ITP rate is 7% for real estate transfers. However, reduced rates may apply for young buyers or those purchasing publicly protected housing.

Aragon

Aragon employs a tiered system based on property value:

• €0 – €400,000: 8%
• €400,001 – €450,000: 8.5%
• €450,001 – €500,000: 9%
• Over €500,000: 10%

Additionally, a 60% tax relief is available for large families purchasing a main home.

Asturias

Asturias has a progressive tax structure:

• €0 – €300,000: 8%
• €300,001 – €500,000: 9%
• Over €500,000: 10%

For rural areas at risk of depopulation, reduced rates apply, such as 4% for properties up to €150,000.

Balearic Islands

The Balearic Islands have a complex rate structure based on the actual or declared value of the property:

• €0 – €400,000: 8%
• €400,001 – €600,000: 9%
• €600,001 – €1,000,000: 10%
• Over €2,000,000: 13%

A 4% rate applies for main homes valued at €270,151.20 or less under specific conditions.

Canary Islands

The general ITP rate is 6.5%, which can drop to 5% for main homes under certain conditions. The taxable base for these homes cannot exceed €200,000.

Cantabria

Cantabria has a general rate of 9%, with reduced rates of 7% for homes valued below €200,000 and 4% for large families or individuals with disabilities.

Castile and León

The general rate is 8%, increasing to 10% for properties over €250,000. A 4% rate applies for homes that will become the buyer’s main residence under specific conditions.

Castile-La Mancha

The general ITP rate is 9%, dropping to 6% for first-time homebuyers under certain conditions.

Catalonia

Catalonia has recently restructured its ITP rates, with a new scale that includes rates from 10% to 13% based on property value. A 5% rate applies for publicly protected housing.

Extremadura

In Extremadura, the general rate is 8%, with reduced rates for first homes and properties intended for business activities.

Galicia

Galicia has a general rate of 8%, which can drop to 3% under specific conditions, including for individuals with disabilities.

Madrid

The general ITP rate in Madrid is 6%, with reductions available for large families and first-time homebuyers.

Murcia

Murcia’s general ITP rate is 8%, with lower rates for young entrepreneurs and large families.

Navarre

In Navarre, the general rate is 6%, with a reduced rate of 5% for families with two or more children.

La Rioja

La Rioja applies a general rate of 7%, with reductions available for first-time homebuyers and large families.

Valencian Community

The ITP rate in the Valencian Community will change mid-2026, with a general rate of 10% until May and 9% thereafter.

Basque Country

The Basque Country has a general rate of 7%, with reduced rates for large families.

Qualifying for Reduced ITP

To qualify for reduced ITP rates, buyers must meet specific criteria set by the regulations of their autonomous community. This may include age restrictions, purchasing publicly protected housing, or having a recognized level of disability.

Where is ITP Lowest?

The lowest ITP rates are found in the Community of Madrid, Navarre, Canary Islands, and Andalusia, where rates range between 6% and 7%. However, various exemptions and reductions can significantly lower the tax burden for eligible buyers.

Understanding the intricacies of the Property Transfer Tax is vital for anyone considering purchasing property in Spain. By familiarizing yourself with the specific rates and potential reductions available in your desired autonomous community, you can better navigate the financial aspects of your property purchase.