If you wish to emigrate to Spain soon, you may be able to benefit from a reduced transfer tax when purchasing property. In this post, you will find more information on the different favourable rates when buying the family home in Spain.
General framework
The various autonomous regions in Spain have the power to set transfer taxes. These are the transfer taxes on resale (ITP) and stamp duty on new construction (AJD).
There is no reduced VAT rate on emigration. Residential new construction is sold at 10% VAT in the mainland and Balearic Islands and 7% sales tax in the Canary Islands.
So we need to check what the reduced rates and specific conditions are for each autonomous region. Below are some examples.
Reduced rates in Comunidad Valenciana (Costa Blanca North & South)
In the Comunidad Valenciana there are a number of reduced rates for the first family home.
For houses for resale (ITP ), there is a rate of 8% for persons under 35 years of age acquiring their first family home. For persons acquiring a family home for the self-housing of their 'large family' with a combined income below 45000, the rate is 4%. The same applies if you buy the family home as a disabled person, for example with a disability > 65%.
A 'large family' basically means (but there are several exceptions): 2 parents with three children under 21 years of age.
For new building (AJD), there is a reduced stamp duty rate of 0.1%. The deadline is 12 months after purchase to make the property a permanent residence. Additional condition is that you continue to live there for 3 years after deed. You should register with the municipality as soon as possible, with a deadline of 12 months, as well as provide proof of residence (e.g. water and energy bills).
Find out more about purchase costs in Valenciana here.
Reduced rates in Murcia
For houses for resale (ITP) there are reduced rates for buyers under 35 with a professional income below €26,620 and €1,800 income from savings and investments, and who wish to purchase their family home. In addition, the 3% rate also applies to 'large families' with an income of less than €44,000 (unless you have more than 3 children). Finally, there is also the rate of 3% for certain disabled people with disability > 65%.
For new-build homes (AJD) there is a reduced stamp duty rate of 0.1%. Compared to the Valenciana autonomous region, the conditions are stricter. For instance, the conditions are the same as for resale in Murcia (see above), while in the Comunidad Valenciana the reduced rate has a wider scope.
Find out more about purchase costs in Murcia here.
Reduced rates in Andalusia
For houses for resale (ITP), the standard rate is reduced from 7% to 6% if the purchase price is less than EUR 150,000 and you are destined the property as your usual residence. If you are under 35 years old, the rate when you buy a property destined as your usual residence with a purchase price lower than EUR 150,000 is even 3.5%.
For new-build homes (AJD), the standard rate of 1.2% is reduced under the same conditions. The rate is 1% for habitual residence with a purchase price of EUR 150,000, but 0.3% if you are under 35.
In addition to the above reductions, there are other benefits, for example for victims of domestic violence.
Find out more about purchase costs in Andalusia here.
Decision
If you emigration plans and you are considering buying a property in Spain, be sure to ask about the reduced transfer tax rates. The concrete conditions vary by autonomous region.
If you have any questions about applying the reduced rates or emigrating to Spain, please feel free to contact with us.
