When buying a home, one of the most common fears among future owners is the real cost of the operation. Beyond the price of the property, the purchase entails a series of taxes and expenses which can significantly increase the final outlay. One of the most relevant taxes is the Property Transfer Tax (ITP), which in second-hand homes, as explained by the Treasury, must be paid by the buyer and whose amount varies depending on the autonomous community, and can be between 6% and 11% of the value of the property.
However, in some very specific cases, there is the possibility of completely avoiding the payment of this tax, as explained by the notary María Cristina Clemente in a video published through the Notaría Buendía Instagram account.
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The notary explains that “In certain sales of second-hand homes it is possible to avoid paying the property transfer tax”provided that three fundamental requirements established by tax regulations are met.
In which cases you can avoid the ITP when buying a used home
As detailed by Clemente, the requirements to avoid paying the ITP in a home purchase and sale transaction are the following:
- “That both, seller and buyer, are liable for VAT and that the buyer intervenes in this operation as a businessman or professional.”
- “That the buyer has the right to a total or partial deduction of the input VAT.”
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“That the deed of sale expressly includes the seller’s waiver of this VAT exemption.”
Clemente explains that this waiver by the seller of the exemption has three immediate effects:
- First of all, “The seller does not have to charge VAT on the invoice for that transmission.”
- In second place, “It is the buyer who has to self-report and pay the VAT, which is deducted in the same declaration.”
- And, thirdly, “the buyer must self-assess by documented legal acts.”
In this scenario, the sale ceases to be taxed by ITP, as happens with homes used between individuals, and begins to be taxed by VAT and Documented Legal Acts (AJD), always under the aforementioned requirements.
How to know if an operation is taxed by ITP or VAT
The Tax Agency has a tool that allows you to determine whether a property purchase must be taxed by VAT or by ITPas well as who is the person obliged to pay the tax in each case.