The Transfer Tax (Impuesto de Transmisiones Patrimoniales, “ITP”) has gone down from 7% to 6%. The Stamp Duty Tax (Impuesto de Actos Jurídicos Documentados, “IAJD”) paid to purchase a house or to constitute a mortgage has gone down from 1% to 0,75% for houses purchased or real rights created valued in more than 180,000 Euros, to 0,5% for houses or real rights valued from 120,000 to 180,000 Euros, to 0,4% for houses or real rights valued equal or under 120,000 Euros, and to 0,75% for purchases of other kinds of real estate properties, according to article 1 of the Act 6/2013, of December 23rd, on Tax and Administrative Measures (Ley 6/2013, de 23 de diciembre, de Medidas Fiscales y Administrativas), published last December 30th in the Official Gazette of the Autonomous Community of Madrid (BOCM nº 309).
This reduction makes Madrid the cheapest Autonomous Community to buy a second-hand house from a tax point of view. Almost all the other Autonomous Communities have a 10% rate approx for their Transfer Taxes, with some exceptions.
According to this new Act, for example, there would be of 3,000 Euros saving in a second-hand house, an office or a commercial premise valued in 300,000 Euros: instead of 21,000 Euros paid in year 2013 for ITP (Transfer Tax), now 18,000 Euros would have to be paid to the Regional Tax Agency.
The IAJD (Stamp Duty Tax) is applied to purchase a second-hand real estate property or to constitute a mortgage. There is a 0,25%, 0,50% or 0,60% saving over the amount of the house purchased or the value of the mortgage, depending on a scale. For other kinds of real estate properties different from houses, there is a 0,25% saving.
In this sense, there would be a 1,250 Euros saving in a purchase of a house valued in 500,000 Euros, a 2,500 Euros saving in a purchase of an office valued in 1,000,000 Euros, or a 600 Euros saving in a mortgage of 100.000 Euros.
Considering that there are other expenses involved to buy a property, like a valuation report to get the mortgage, lawyer fees, real estate agent fees, notary and Property Registry fees, management company fees, etc. the aforementioned savings in ITP and IAJD could cover some of those extra expenses, making it cheaper to buy a second-hand house or any other kind of real estate property in Madrid.
by Guzmán López, Head of Real Estate Law Dept.