Change of Transfer Tax

As of 1 January 2022, there is a change in the calculation of the transfer tax. Previously, the tax was related to the declared value of the property in the purchase deed.

From now on, the cadastral value (reference value) will also be considered. This value is determined by the tax authorities.

From the start of 2022 transfer tax will be withheld on the higher of these two values. 

Example 1

A property is bought for €400,000 with the corresponding ITP tax of 10%. (ITP = Impuesto sobre Transmisiones Patrimoniales). The reference value of the property turns out to be €423,600.

Instead of €40,000, the buyer in this case has to pay €42,360 (i.e. €2,360 more).

If the reference value is lower than the purchase price, the higher amount is retained.

Example 2

A house is sold for €450,000 with the corresponding ITP tax of 10%. On inspection, the reference value turns out to be lower, namely €423,600.

In this case the transfer tax is 45,000 € and not 42,360 €.

Orange Villas in Moraira advises to ALWAYS hire a lawyer when buying or selling a property. It is best to choose a local solicitor. This legal advisor knows the Spanish and local laws much better than someone in your own country. 

You do not know which lawyer to choose? Orange Villas Real Estate & Development works together with several reputable law firms in the region. Feel free to ask us for advice.