Property Transfer Tax (ITP)

Unlike new-build properties, which are subject to Value Added Tax (VAT) and Stamp Duty (AJD), the acquisition of second-hand properties is subject to Property Transfer Tax (ITP) in its category of Onerous Property Transfers (TPO).

ITP is a tax devolved to the autonomous communities, meaning the applicable tax rate generally ranges between 6% and 11%, depending on the regional location of the property. For example, in the Comunidad de Madrid the standard rate is 6%, whereas in other regions it can reach 10% or more.

The Tax Base and the Cadastral Reference Value

Since 2022, the tax base on which ITP is calculated is no longer determined solely by the price agreed in the purchase agreement, but by the Reference Value set by the Directorate General for Cadastre.

If the value stated in the public deed is higher than the cadastral Reference Value, tax will be paid on the deed value. Conversely, if the value set in the deed is lower than the official Reference Value, the buyer must pay tax on the amount mandated by the Cadastral Administration, unless a formal appeal procedure is initiated proving actual defects in the property.

Reduced Rates and Tax Incentives

Various autonomous communities establish reductions in the ITP tax rate for specific buyer profiles or particular circumstances:

• Young buyers: Age-related discounts (usually under 32 or 35 years of age) for buying a main home.
• Large or single-parent families: Reduced rates applicable if the property is intended as a permanent residence.
• People with disabilities: Discounted rates based on the certified degree of disability.
• Properties in rural or economically disadvantaged areas: Tax benefits designed to encourage population retention.

Notary Fees

The involvement of a notary grants public authority to the deed of sale, guaranteeing legal certainty for the transaction. Notary fees are not freely set; they are strictly regulated by the Government under Royal Decree 1426/1989, which approves the Notary Fee Schedule.

This means that all notaries across Spanish territory charge exactly the same amount for the same service, although they may apply a maximum legal discount of 10% established by law.

Factors Influencing the Notary Bill

The final cost of notary fees depends on several parameters set out in the fee scale:

• The deed price of the property: The higher the property value, the higher the applicable band in the regulated fee schedule.
• The length of the deed: The number of pages in the original document and drafted mortgages slightly increases the final amount.
• Authorised and simple copies: Issuing additional copies for the buyer, seller, and public administrations carries a per-page charge.

Generally, notary fees for the sale of a second-hand home range between 600 and 1,000 euros, depending on the agreed price for the transaction.

Land Registry Fees

Following the signing of the deed before a notary, it is essential to register the title deed with the Land Registry corresponding to the property's location. Although registration is not legally compulsory in Spain unless a mortgage is involved, it is essential to ensure legal protection against third parties.

Like notaries, land registradores base their fees on an official fee schedule regulated by Royal Decree 1427/1989. The cost is calculated according to the value set out in the public purchase deed.

Typically, Land Registry fees for a residential property range between 400 and 700 euros. The registration process generates an entry note and the subsequent submission of ownership data to the Cadastre.

Gestoría Fees

The gestoría (administrative handling agency) is responsible for processing tax settlements (such as ITP) and filing the documentation with the relevant Land Registry. Unlike notaries and registradores, gestoría professionals offer a liberalised service, so their fees are not set by an official tariff.

The indicative cost of gestoría services for handling a property purchase ranges between 300 and 500 euros. When a purchase is carried out without bank financing, the buyer is entirely free to hire the gestoría of their choice or process tax settlement and registration personally.

Additional Costs in the Event of Mortgage Financing

If the purchase requires financing via a mortgage loan, the regulatory framework established by Law 5/2019, regulating real estate credit contracts, distributes costs in a manner favourable to the buyer:

• Borne by the bank: The financial institution must cover in full the notary, gestoría, land registry, and Stamp Duty (AJD) fees associated with granting the mortgage.
• Borne by the buyer: The buyer only pays for the official property valuation (required to determine the property's mortgage capacity) and any copies of the deed specifically requested for personal use.

The official valuation must be performed by an accredited valuation company, and its price usually ranges between 300 and 600 euros, depending on the property type and floor area.

Key Aspects in the Comunidad de Madrid: Subsidised Housing (VPO)

In the Comunidad de Madrid, buying or selling publicly protected housing (VPO) involves specific legal rules that affect the financial transaction.

Before formalising the purchase of a protected property in the Comunidad de Madrid, it is essential to check whether the property remains subject to maximum sale price caps set by regional regulations. Likewise, one must verify whether the property is still within the legal protection period or if it is eligible for declassification (descalificación).

The administrative procedures for declassification or requesting sale authorisation from the Department of Housing of the Comunidad de Madrid require verifying applicant requirements and assessing the repayment of any past subsidies or tax discounts received.

The Role of the Personal Shopper Inmobiliario (PSI)

Accurate financial forecasting and thorough legal verification of encumbrances on a property are essential to avoid unexpected extra costs. A Personal Shopper Inmobiliario (PSI) acts exclusively on behalf of the buyer, ensuring that every stage of the process is transparent and efficient.

The PSI's work includes analysing the cadastral Reference Value to optimise ITP payment, reviewing land registry records prior to signing deposit agreements, and negotiating financial terms for the property. In this way, the buyer secures the best possible final price with complete contractual guarantees.

For buyers seeking comprehensive advice with legal rigour backed by prestigious firms, Sky Real Estate offers a specialised service. Its specialised legal division has been recognised at the European Legal Awards 2023-2025, ensuring rigorous technical and legal audits for every transaction. Furthermore, for financial loan processing and brokerage, they operate under the required supervision, listed in the official register of real estate credit intermediaries (ICI D-286 of the Banco de España).

If you wish to safeguard your investment and be accompanied by professionals dedicated to protecting your interests as a buyer, we invite you to discover how our personal shopper inmobiliario (PSI) service can assist you.