The Property Transfer Tax (ITP) is one of the charges you need to consider when buying a a second-hand home.

Our legislation has been considering it for years, but recently it has been more talked about, mainly because it also applies to those who rent a property.

For a long time, municipalities did not pay much attention to the collection of this tax, but recently a campaign has been launched to make it happen.
This is why we are going to explain everything to you about this tax.

What is the property transfer tax?

The Property Transfer Tax (ITP) is a tax that affects all those who carry out transactions in which rights to property are acquired, i.e. the natural or legal person who acquires the asset.

For this reason, people who rent a property for housing accommodation, are affected by this type of tax, as they pay a monthly fee to the owner for the rent.

Although the ITP has been in force since 1993, its payment is practically symbolic. And almost none of the rental contracts are subject to this tax, because the tenants are not aware of this burden, or the owners of the property themselves do not know that they will be subsidiary responsible.

Who must pay this tax?

Any natural or legal person who acquires property rights is obliged to pay property transfer tax.

Therefore, in the case of a rental property, it is always the tenant who has to pay this tax.
It is also one of the most common expenses when buying a second-hand property.

The Government regulates the application of this tax, although as it has delegated its administration to the Autonomous Communities, they are the ones who decide on the amount to be paid.

What else does the ITP cover?

The property transfer tax also applies to other areas, such as corporate activities.

The ITP also applies to documented legal transactions, i.e. any document that requires the presence of a notary.

How is the ITP calculated?

There are minimum standards set by the central government, although each Autonomous Community has the final say.

According to the central government, the ITP is 6% for real estate, 1% for businesses and 4% for furniture.

It is worth pointing out that many people are unaware of this. In cases such as rentals, it is advisable to seek professional advice if you have any doubts about its application.

How can DFLAT Madrid help you?

We have been managing and marketing owner-occupied rental properties for over 20 years. We market our stock through B2C, B2B, removal companies, relocation, travel and our own channels.
If you are an investor or owner of a property in Madrid, we can help you optimise the performance of your property.