Andalusia makes transfer tax and stamp duty cuts

On October 20, 2021, the parliament of the Regional Government of Andalusia (Junta de Andalucía) approved the new regional taxation law (Ley de Tributos Cedidos), with the support of the Partido Popular, Cuidadanos and Vox political parties. The Andalusian government estimates the measures will provide tax savings of up to 323 million euros for residents of Andalusia.

At the end of March 2021, the governing coalition of the Junta de Andalucia already introduced cuts to two taxes that applied to many property transactions in the region from April 27, 2021: transfer tax (Impuesto de Transmisiones Patrimoniales or ITP in Spanish) and stamp duty (Actos Jurídicos Documentados or AJD in Spanish).

Property transfer tax, which had previously been levied at a sliding-scale rate from 8% to 10% on the purchase of resale homes, urban land bought from private sellers and parking spaces was reduced to a flat rate of 7%. Stamp duty, which is applicable whenever a mortgage deed (escritura de hipoteca) is signed before the notary, was reduced from 1.5% to 1.2% at the same time.

The rates of VAT (Impuesto de Valor Añadido or IVA in Spanish) levied on the sale of new-build housing and building land that is sold by professionals continue to be 10% and 21% respectively.

What do transfer tax cuts mean for property buyers?

Until April 27, 2021, buyers in Andalusia were obliged to pay transfer tax depending on the sale price of the property in question. For the first 400,000€ of the price, the rate of ITP was 8%, with 9% levied on the next 300,000€ and the top rate of 10% applied to any amount over 700,000€. When factoring in fees for notarising the deeds, the Land Registry, legal advice and mortgages, where applicable, this typically resulted in total costs of between 10.8-12.8%.

For a couple of key price points – the minimum investment required to be eligible for Golden Visa status and the seven-digit barrier – let’s look at what you’ll save if you buy property in Andalusia:

Save 6,000€ in transfer tax on a half-million euro purchase

For an apartment costing 500,000€, you would previously have paid 32,000€ on the first 400,000€ and 9,000€ on the remaining 100,000€, adding up to a total of 41,000€. Now, your ITP bill would be ‘just’ 35,000€, a saving of 6,000€.

Transfer tax savings of 21,000€ if you buy for a million euros

If you were to buy a villa for 1,000,000€, you would save 4,000€ on the first 400,000€, 8,000€ on the next band up to 700,000€ and an additional 9,000€ on the last 300,000€. As a result, your total ITP cost 70,000€, rather than 91,000€, equivalent to a reduction of 21,000€.

And you can even save money if you invest in parking spaces

If you want to purchase a parking space that is sold separately from a home or if you wished to buy two or more spaces on the same contact, a similar sliding scale of 8-10% was applied to sale prices in three bands: 8% from 0-30,000€, 9% up to 50,000€ and 10% thereafter. With the passage of the new law, the same flat rate of 7% applies to all garaje spaces, whatever their sale price.

By Adam Neale | Property News | November 23rd, 2021

• Share Property