Guide to ITP in Andalusia: reduced rates and how to avoid fines

How the ITP works in Andalusia for second-hand homes

The Impuesto sobre Transmisiones Patrimoniales (ITP, property transfer tax) is the mandatory tax you must settle when acquiring a second-hand property. Unlike new-build homes, which are subject to VAT, the administration of this tax is directly the responsibility of the regional government.

Since the community's last tax reform, the general ITP rate stands at a fixed 7%. This percentage is applied uniformly to the property's value, eliminating the former progressive brackets that increased costs for higher-value transactions.

Thus, whether you acquire a functional apartment or invest in a luxury coastal villa, the general 7% rate will apply, unless you meet the requirements to qualify for any of the current tax reliefs.

Reduced rates of the transfer tax in southern Spain

Buying a house involves a considerable outlay. To ease this tax burden when acquiring a main residence, Andalusian regulations include a set of very attractive reduced rates.

These deductions allow reducing the general 7% rate to much more competitive percentages, facilitating access to ownership. To benefit from these tax advantages, it is essential to meet certain specific economic and personal requirements.

Main residence up to 150,000 euros for young people

If you are under 35 years old, you can access a reduced rate of 3.5% for the acquisition of your first main residence. The only requirement is that the property's computable value does not exceed 150,000 euros.

For buyers who exceed this age limit, the regulations offer an intermediate tax rate of 6%, provided the property is intended as a main residence and its value does not exceed the same 150,000 euros.

Special relief for large families and disability

The Andalusian Government directly protects groups with special space or mobility needs. Large families and people with a disability degree equal to or greater than 33% can be taxed at the minimum rate of 3.5% when buying their main residence.

Furthermore, for these groups the property value limit is significantly increased, allowing the property to reach up to 250,000 euros in value without losing the right to the tax relief during the purchase process.

The impact of the Reference Value on ITP in Andalusia

Since 2022, the rules of the tax game changed radically. It is no longer sufficient to declare the actual sale price agreed in the public deed before a notary; the Cadastral Reference Value now comes into play.

This objective indicator legally determines the minimum taxable base for calculating the ITP in Andalusia. The Andalusian Tax Agency systematically compares the deed price with this cadastral value and will require you to pay taxes on the higher of the two amounts.

For example, if you buy a property for 150,000 euros because it needs renovations, but the Cadastral Reference Value is 180,000 euros, you will be required to settle the tax on the basis of those official 180,000 euros.

Risks of signing the deed below the minimum cadastral value

Ignoring the official cadastral value is a severe tax risk. If you settle the tax based solely on a sale price lower than the reference, the Andalusian Tax Agency's IT system will automatically issue a proposal for a complementary assessment.

This requirement will demand payment of the difference of the unpaid tax, adding the corresponding late payment interest accrued since the tax accrual date.

Also, bear in mind that to retain the reduced rates you must actually occupy the property within a maximum period of twelve months. Failure to meet this condition or renting out the property before the legal period will result in the obligation to repay the applied tax reliefs along with the relevant penalties.

Deadlines for self-assessment and how to appeal to the regional tax authority

The filing and payment of ITP in Andalusia is carried out using Form 600. The legal deadline is two months from the day after the granting of the public deed. Exceeding this deadline entails late payment surcharges that can reach 15%.

If you believe the Cadastral Reference Value is unfair or disproportionate with respect to the property's actual condition, the recommended legal strategy is to self-assess the tax first according to the reference value to avoid surcharges and additional interest.

Subsequently, you should submit a request for correction of the self-assessment and a refund of undue payments. For this claim to succeed, it is crucial to provide a certified expert appraisal report that technically proves that the property's condition or actual characteristics justify a market value lower than the official one.

Accurately calculating the tax costs before signing the purchase agreement is essential to avoid unpleasant surprises and unexpected payment demands months after the acquisition. The current real estate market requires a rigorous financial analysis, ensuring that the conditions of each relief are strictly met and comparing the sale price in advance with the official reference values.

To ensure that the filing of Form 600 and the rest of the associated procedures are handled without formal errors, it is highly recommended to have specialized legal advice and the experience of a trusted real estate agency on the Costa del Sol that pre-assesses the fiscal viability of the transaction.