How much property transfer tax is paid in the Valencian Community when buying a second-hand property?
When we think about the budget for buying a property, we tend to focus on the price of the property, often forgetting about the other expenses involved in the purchase of a property.
One of these costs that often goes unnoticed is the Property Transfer Tax (ITP), a tax that is applied to the purchase of second-hand properties and which can catch you off guard, especially if you are a foreigner and are not familiar with the Spanish tax system.
- You may be interested in: What do you need to buy a house on the Costa Blanca if you are a foreigner?
In this article, we will explain how the Transfer Tax works in the Valencian Community so that you can plan your budget for your new home more accurately.
Property Transfer Tax in the Valencian Community
Transfer Tax is a tax that is devolved to the autonomous communities, so if you are buying a property in Spain, you will need to check the regulations governing this tax in the autonomous community in which your property is located.
Below, we will explain how the Transfer Tax works in the Valencian Community so that you know how much you will have to pay when you buy a property in this region.
*important! from the 1st of January 2022, the calculation of the Transfer Tax in Spain is based on the cadastral reference value, not on the deeded value of the property, unless this is higher than the cadastral reference value.
General rate of ITP in the Community of Valencia
The general rate of Transfer Tax in the Valencian Community is 10%. This percentage will rise to 11% for properties valued at more than 1,000,000 euros.
Practical Example:
Imagine that you have bought a property in Moraira for 550.000 euros, but whose value in the Cadastre is 570.000 euros. According to the new ITP regulations, you will have to pay tax on the highest value between the deeded value and the cadastral reference value, so you will have to calculate the tax on the 570,000 euros that the cadastre shows.
- 570.000 euros (cadastral reference value) x 10% = 57.000 euros of ITP
Reduced rates of ITP in the Valencian Community
In order to facilitate access to housing and to offer support to certain population groups, the Valencian Tax Agency also establishes the following reduced rates in the ITP.
ITP of 8%
- Young people under 35 years of age who buy their first home for a value of more than 180,000 euros.
ITP of 6%
- Young people under 35 years of age who buy their first home for a value of less than 180,000 euros.
- State-subsidised housing whose value does not exceed 180,000 euros.
ITP of 4%
- Large families or single-parent families buying a primary residence for a value of more than 180,000 euros.
- People with a degree of disability equal to or greater than 65% who buy a home worth more than €180,000.
- Women victims of gender violence who purchase their primary residence.
- Properties located in advanced or depopulated industrial areas for use as business headquarters.
ITP of 3%
- Large families or people with a disability equal to or greater than 65% who purchase a primary residence for a value of less than €180,000.
Below you will find a summary table of the different rates of ITP that govern the purchase of homes in the Valencian Community:
| Applicable type | Conditions |
|---|---|
| 11% | Dwellings of less than 1.000.000 euros. |
| 10% | Dwellings up to 1,000,000 euros. |
| 8% | Under 35s buying their first home for more than 180,000 euros. |
| 6% | – Under 35s buying their first home for less than 180,000 euros. – State-subsidised housing whose value does not exceed 180,000 euros. |
| 4% | – Large families or single-parent families buying a primary residence worth more than 180,000 euros. – People with disabilities who buy a primary residence worth more than 180,000 euros. – Women victims of gender violence who purchase their primary residence. – Properties located in advanced or depopulated industrial areas for business headquarters. |
| 3% | Large families or people with a disability equal to or greater than 65% who buy a home of less than 180,000 euros. |
How much is ITP paid in other countries?
The Transfer Tax, as applied in Spain, does not have an exact correspondence in other countries. However, there are similar taxes levied on the purchase and sale of second-hand homes, although with different names and rates:
France
There is a similar tax called Droits de mutation à titre onéreux (DMTO) which is equivalent to 5.81% of the price of the property, including municipal taxes.
Italy
A tax called Imposta di Registro is levied on the transfer of dwellings between private individuals, the rate of which varies between 2% and 9%, depending on the type of purchaser and whether or not it is the purchase of a first home.
Germany
There is a real estate transfer tax called Grunderwerbsteuer, the rate of which varies between 3.5% and 6.5% depending on the federal state.
United Kingdom
The equivalent of the ITP is the Stamp Duty Land Tax, a progressive rate with different brackets depending on the price of the property.
The Netherlands
They have the Overdrachtsbelasting, a property transfer tax of 2% for main residence and 10.4% for second homes or other properties.
Looking for a house in the Valencian Community?
The strong demand that the Valencian Community is currently experiencing, makes finding a house in this region more and more complicated.
At Hispania Homes we are a real estate agency in Moraira specialised in buying and selling properties on the Costa Blanca. Our membership of various MLS in the area gives us access to one of the largest catalogues of properties in the region, so the chances of finding a property according to the needs of each buyer are multiplied.
In addition, through our Investment Club, our clients have priority access to properties that have not yet come on the market, being the first to know about the best opportunities.
Whatever your reason for buying, at Hispania Homes you will find a service adapted to you. Contact us and start enjoying your home on the Costa Blanca.
