How do taxes condition the purchase of an apartment?

BarcelonaBuying a flat is a decision made after doing numbers and more numbers and weighing multiple variables. Among them, the money the buyer will have to disburse when the operation materializes, which makes more than one person worry.

In general terms, the mortgage covers around 80% of the flat's value, so new owners will have to put up the remaining 20% at the time of purchase (popularly, the down payment). However, that's not all: they will also have to go through the Tax Agency and pay "between 12% or 13%" of the property's price additionally, estimates economist and tax expert Jaume Menéndez. Therefore, ideally buyers should have between 32% and 33% of the amount.

The impact of taxes changes both depending on the characteristics of the property and the owner's situation. It should be remembered that the levies are applied to the purchase price, with few exceptions. "You have to know what scenario you are in," warns Menéndez.

New build or second-hand?

If the dwelling is newly built, the buyer will have to pay a reduced VAT of 10% – which is the State's responsibility – and bear the cost of documented legal acts (ADJ), a type of property transfer tax (ITP) that taxes the registration of the property in the Property Registry and the documents formalizing the sale. In Catalonia, it is 1.5%.

The transaction will also be subject to VAT if, even if the dwelling is not new construction, renovation works have been carried out and exceed 25% of the price, or if the final objective of the works has been to rebuild the property.

On the other hand, if the object of the purchase is a second-hand property, the future owner will have to pay the onerous property transfer tax (TPO) – a type of ITP – in the autonomous community where the property is located. In Catalonia, it ranges between 10% and 13%, depending on the value of the dwelling, the only territory in the State where, along with the Balearic Islands, it only reaches rates above 11%.

In fact, in Catalonia, a rate of 20% has been applied for just over a week to purchases of entire residential buildings and in cases where the new owners are large holders, funds, and large real estate companies.

Singular scenarios

Despite this basic outline, the scenario changes according to the buyer's profile. On the one hand, regarding free housing, the TPO is reduced to 5% if the buyer is young people up to 35 years old, single-parent families, large families, families with members living with a disability, or victims of gender-based violence. In all these cases, income cannot exceed 36,000 euros annually. For new construction housing, young people up to 35 years old do not have to pay documented legal acts (ADJ).

On the other hand, if the property is classified as official protection housing (HPO), VAT becomes a super-reduced rate of 4% and, documented legal acts (AJD), 0.1%. In contrast, if the sale of this protected housing is subject to the property transfer tax, the TPO is 7%.

Beyond public housing, and given the severe housing crisis and territorial challenges, the Government also facilitates the purchase and sale in rural areas –where the TPO ranges between 3% and 4%– and for minority ownership models, such as housing cooperatives. Last year, the Government led by Salvador Illa and Comuns agreed that non-profit housing cooperatives do not have to pay property transfer tax, neither if they acquire a building, nor a plot of land.

Who pays more: the buyer or the heir?

According to the analysis of housing taxation prepared by Menéndez at the request of the Barcelona Urban Property Chamber, taxes can represent up to 60% of the initial price of a property between the time the owner buys it and sells it. The Institute of Economic Studies and the General Council of Economists estimates that almost 1 in every 5 euros that public coffers collect from taxes comes from housing-related levies (18% in the 2024 fiscal year).

Menéndez highlights that income tax (IRPF) is the tax that collects the most, as it taxes the gains of property sellers (i.e., the difference between what they received and what they paid for the property at the time). In fact, the seller will also have to pay municipal capital gains tax, which takes into account the increase in value of the land where the property is located.

With inheritance and donation tax permanently in the spotlight, Menéndez assures that the cost of inheriting a property "tends to be lower" than buying and selling, especially if the recipient of the property is the deceased's partner or children. "The average of fees paid for more than 80% of inheritances does not exceed 150 euros," he points out.

Beyond the taxes to be paid at the time of purchase or acceptance of inheritance, the expert reminds those considering acquiring a property that, once it is theirs, they will have to pay the property tax (IBI), which is municipal, and income tax (IRPF) if it is not their primary residence.