ITP (Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentales), in English Property Transfer Tax and Documented Legal Acts, is an indirect tax which is applied to onerous transfers of property, in other words operations of exchange of wealth or assets between living persons (such as the purchase or sale of a car, renting a house, payment for use of land, etc.). It does not apply in cases of transfers of capital or assets as inheritance.
Common terms
Passive subject of the tax: this is the person who acquires the use of the capital, normally the buyer or renter, and is the person who must pay the tax.
Taxable base: this is the total value of the transferred capital, which is used to calculate how much tax is due, the rate of which changes depending on the Autonomous Community and territory.
ITP on purchases, sales and rentals
Purchase or sale of a second-hand property: To calculate the amount of ITP to be paid, it is necessary to stick to the rules imposed by the Autonomous Community in which the passive subject lives or the property in question resides.
It is calculated using a percentage applied to the taxable base of the asset. In this case, the taxable rate used is the financial value which can be calculated in the same way as the Inland Revenue Tax Agency for each Autonomous Community.
The percentage which is applicable is different in each Autonomous Community and is usually between 6% and 10%, although there are some exceptions. In some communities, it may vary according to the financial or family situation of the buyer (e.g. large families) or the value of the asset (e.g. protected properties vs. luxury properties).
Renting a house: Rental of a property between two individuals is considered an onerous transfer of property within a limited timeframe. The tenant must pay the ITP for the transfer to be official and to receive their rights to use the property.
The taxable base is the rental amount for the entire length of the contract. For example, for a monthly rent of 1000 euro for 3 years, the taxable base would be 36,000 euro. The amount of tax to be paid, as in the case of purchase or sale, is calculated using the percentage established by the Autonomous Community on the taxable base.
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