The transfer of a property attracts a number of taxes, primarily depending on whether the property is new or second-hand.
Equivalent to VAT in the UK and Ireland this tax is payable on the sale of new properties (as opposed to second-hand) and is set by the central government. In a move to assist cutting the backlog of new properties that is currently weighing down on the market, the government has announced a halving of the rate from 8% to 4% until the end of 2011.
An exception to this is the Canary Islands which levies IGIC instead of IVA. The standard rate there is 5% though this has been lowered to 2.75% for those who are purchasing the first home, where the property is valued at less than €150,000.
The sale of a new property also attracts AJD (impuesto de actos juridicos documentados) and is set by the regional government. It varies therefore according to the autonomous community in which the property is located and can lie anywhere between 0.5% and 1%.
Impuesto de Transmisiones Patrimoniales is the equivalent to IVA but is payable on the purchase of a second-hand properties and the rate is set by the regional governments. It is up to each one to decide the rate but most have opted to set it at the same level as IVA and so typically it ranges between 6% and 8%.
The equivalent of IVA or VAT in the Canary Islands is called IGIC and is levied at a rate of 5% on all new properties in the region. While the regional government has not adopted the 50% cut in stamp duty that the central government has approved with regard to IVA, it has approved a reduction in the IGIC rate from 5% to 2.75% for first time buyers of properties that are worth less than €150,000.