Before a title deed can be registered into a new owner’s name, or a deed issued for a newly constructed building, transfer tax has to be paid by the purchaser. It may come in two variants: Transfer Tax (ITP) at 6% or Value Added Tax (IVA) at 7% plus Stamp duty (AJD) at 1% when buying from a developer or promoter. These two taxes are calculated on the declared purchase price on the title deeds.
Also, the local authorities charge a tax on the increase of the value of land since the previous sale. It is not based on the seller’s capital gains tax but on a number of calculations and values set by the Town Hall. This tax is called “Plusvalía”, and according to the law it is the seller’s responsibility, although it is commonly stipulated in the contract that the buyer pays it. It is a point which will be negotiated between buyer and seller.
