The Andalucían finance minister announced a reduction to ITP last night. ITP is the transfer tax that buyers pay on resale property purchases in Spain. For buyers considering property in Andalucía, this is a meaningful step in the right direction.
What Is ITP and Who Does It Affect?
ITP stands for Impuesto de Transmisiones Patrimoniales. Buyers pay it when purchasing a resale property. In contrast to new-build purchases, resale buyers pay ITP rather than VAT.
Until now, the ITP rate in Andalucía stood at 7%. Consequently, a buyer purchasing a resale property at €500,000 would pay €35,000 in transfer tax. This represented a significant cost for international buyers entering the market.
What Has Been Announced?
The finance minister confirmed the change will come in the December budget. The ITP rate will reduce from 7% to 6.75%. Moreover, the government has outlined a plan to lower the rate further to 6% in gradual steps over time.
This is a staged approach rather than an immediate cut. The government will introduce each reduction incrementally. Indeed, the direction of travel is clear: Andalucía is actively reducing the cost of buying property.
Why This Matters on the Costa del Sol
Resale properties predominantly drive the Costa del Sol market. Furthermore, the most sought-after areas such as Marbella, Benahavis, and Estepona are largely established markets with existing homes. The majority of international buyer transactions here involve resale rather than new build.
This reduction therefore has a direct impact on buyer costs. On a €1,000,000 resale purchase, the saving moves from €70,000 to €67,500. As further reductions come into effect, these savings will grow considerably.
What Stays the Same
It is important to note that VAT on new-build properties remains unchanged. Buyers purchasing off-plan or newly completed homes will not see a difference in their tax position. Additionally, other standard purchase costs such as notary fees, land registry, and legal fees remain as before.
Similarly, the ITP rate applies only to the resale sector. This distinction is worth understanding before any buyer proceeds with a purchase decision.
What This Means for Buyers Acting Now
Buyers who complete on resale properties from 1 January 2027 will benefit from the reduced rate. The percentage reduction may appear modest. However, on higher-value transactions, the saving is tangible and immediate.
As a result, buyers who have been considering a purchase have an additional reason to plan their completion for early 2027. The outlook for further reductions also provides a positive backdrop for the market heading into 2027. Consequently, confidence in Andalucía as a destination for property investment continues to strengthen.
Speak to Us About Your Purchase Plans
At Collective Real Estate, we stay close to legislative changes that affect our clients. If you are considering a resale purchase on the Costa del Sol, we can help you understand how this announcement affects your costs.
Contact us today to discuss your plans.
