ITP, VAT and AJD: Spain's three purchase taxes explained

Nobody buys a house for the taxes. But everybody pays them. In Spain, a property purchase drags one of two tax blocks depending on whether it's a resale or a new build. In the first case, ITP. In the second, VAT plus AJD. Three acronyms that decide whether your purchase costs 10 % or 11.5 % more. This guide breaks them down one by one, with the rates currently in force in the Valencia region.

The mother rule: resale or first transmission

The factor that decides which tax you pay is not the construction year but who is selling:

• First transmission (the seller is a developer delivering a new property for the first time) → VAT + AJD
• Second or later transmission (the seller is an individual, a company reselling, a bank, an inheritance) → ITP

A 1985 villa sold by an individual pays ITP. A freshly completed flat delivered by the developer pays VAT+AJD. A freshly completed flat the developer sold to an investor who now resells it to you pays ITP, not VAT — because it's no longer a first transmission.

ITP — Resale

What it is

ITP stands for Impuesto sobre Transmisiones Patrimoniales Onerosas. It's a regional tax: each autonomous community sets its own rates within limits. The buyer pays it, self-assessing via Form 600, and it must be filed within 30 working days of the deed date.

General rate in the Valencia region

• 10 % until 31 May 2026
• 9 % from 1 June 2026 (for properties up to €1M)
• 11 % for properties above €1,000,000

The taxable base is the greater of the deed price and the Cadastre reference value. If you buy at €250,000 but the Cadastre reference is €270,000, the Tax Office calculates on €270,000. Check the reference value before signing at the Cadastre e-office.

Reduced rates in the Valencia region

Valencian regulation provides reductions if you meet specific conditions on your primary residence:

• Young buyers under 35: 6 % if the property value does not exceed €180,000 and you meet income limits
• Large families: 3 % for properties up to €180,000, 4 % above
• Disabled buyers: 4 % under special regime
• VPO general regime: 4 %
• Depopulation-risk municipalities: reduced rates

All reduced rates require the property to be the primary residence of the buyer and are generally subject to income limits. They can't be combined: you can't stack the young-buyer discount with the large-family one.

VAT — New build

What it is

When you buy directly from the developer a property that has never been transferred before, you don't pay ITP: you pay VAT. It's a state tax, uniform across Spain. The buyer pays it, embedded in the price the developer charges, which the developer then remits to the Tax Office.

Applicable rate

• 10 % — reduced rate for new-build residential property, parking space (up to two) and annexes when transferred together with the dwelling
• 4 % — super-reduced rate, only for properties classified as VPO special regime or public promotion, transferred directly by the developer. Strict and rare conditions, uncommon in Costa Blanca residential markets

There are no reduced rates for young buyers, large families or primary residence: VAT is uniform.

AJD — Documented Legal Acts

What it is

AJD taxes the notarial documents registered in the Land Registry. In a purchase it appears at two distinct moments that should not be confused:

AJD on the new-build purchase deed

When you buy a new build you pay VAT to the developer and also AJD on the purchase deed. The buyer pays it. It's regional, with these rates in the Valencia region:

• 1.5 % until 31 May 2026
• 1.4 % from 1 June 2026

On resale there is no AJD: you've already paid ITP, which is incompatible with AJD on the same transaction.

AJD on the mortgage deed

When you sign a mortgage, the loan deed also triggers AJD. The rule changed here: since November 2018 (Law 17/2018), the AJD on the mortgage deed is paid by the bank, not the client. It's the bank's cost, not yours. Same applies to notary, registry and gestoría fees associated with the mortgage deed.

Total cost

Let's see both scenarios with a €300,000 property in the Valencia region, before 1 June 2026:

Resale

• ITP 10 % → €30,000
• Notary + registry + gestoría → ~€3,000
• Lawyer (optional) → €1,500-3,000
• Approximate total: €34,500-36,000 (on €300,000, that is 11.5-12 %)

New build

• VAT 10 % → €30,000
• AJD 1.5 % → €4,500
• Notary + registry + gestoría → ~€3,000
• Lawyer (optional) → €1,500-3,000
• Approximate total: €39,000-40,500 (on €300,000, that is 13-13.5 %)

The gap between the two scenarios is roughly €4,500 — exactly the new-build AJD. In exchange you get a property with a ten-year warranty, a bank guarantee during construction and move-in-ready finishes.

The Cadastre reference value

Since 2022, the taxable base for ITP and other wealth-related taxes is not the deed price: it's the greater of the price and the Cadastre reference value. It's a figure calculated annually by the Cadastre's General Directorate for each property based on zone, surface, age and type.

Practical consequence: if you negotiate a price well below the reference value, the Tax Office calculates ITP on the reference value, not on the real price. You can challenge it administratively if you consider it disproportionate — a long but feasible process. That's why you should check the reference value at sedecatastro.gob.es before signing arras.

Payment deadlines

• ITP: 30 working days from the deed signing
• VAT: paid to the developer at the moment of purchase (embedded in the price)
• AJD: same deadline as ITP, 30 working days from the signing

Late payment triggers interest and, eventually, surcharges. The usual practice is for the gestoría to handle it on the signing day, together with the Land Registry inscription.

Common tax mistakes

• Thinking new build pays ITP. It doesn't. New build pays VAT + AJD. Only a second transmission of the same property pays ITP.
• Forgetting the Cadastre reference value. It can come in above the agreed price and inflate the ITP bill.
• Believing the bank pays the purchase-deed AJD on a new build. It only pays the mortgage-deed AJD, not the purchase deed.
• Applying a reduced rate without meeting all conditions. A rejected reduced rate turns into a supplementary assessment with interest.
• Financing the price but forgetting the taxes. The bank lends on appraised value, not on total outlay. Taxes come out of your own cash.

Frequently asked questions

Can I deduct any of this in my tax return?

If you are Spanish tax-resident and buying your primary residence, some autonomous communities allow personal income tax deductions, but not at the state level. The state deduction for primary residence was abolished for purchases after 2013. As a non-resident, personal deductions don't apply.

What if the seller is a bank (REO)?

It depends on whether the bank transfers as first or second transmission. If the property has never been delivered by the developer and the bank takes it over via dación en pago, it may qualify as first transmission subject to VAT. If it had been transferred before, it pays ITP. Your lawyer must verify this in the registry history before signing.

Is there an exemption in inheritance or donation?

ITP does not apply to inheritances or donations: those are taxed under the Inheritance and Gift Tax (ISD), also regional and with its own reductions. Different animals.

Can I refuse to pay AJD on a new build?

No. It's mandatory and always paid by the buyer. Only the mortgage-deed AJD is paid by the bank.

What if the real price is higher than the deed price?

Signing below the real price is serious tax fraud. The Tax Office can detect the gap, charge interest, penalties and, in extreme cases, open a criminal case. The apparent saving is not worth it.