ITP (property transfer tax)
The tax paid by the buyer of a second-hand home in Spain, at a rate set by each autonomous region.
Detailed explanation
It applies to private sales and to used housing, at rates of roughly 6% to 11% depending on the region. Since 2022 the taxable base is not simply the agreed price: it is the higher of the price and the Cadastre's reference value. Buying well below market — exactly what a distressed investor does — means the tax is calculated on a figure above what was actually paid.
Practical example
A flat bought for €60,000 with a reference value of €95,000 is taxed on €95,000. At 10%, that is €9,500 in ITP, not the €6,000 the price alone suggested.
When it matters
It is the cost most often left out of the return calculation on a discounted purchase, and it can eat several points of margin.
At Arkos Investor
We calculate the reference value and the regional ITP inside the asset analysis, before you make an offer.