The property transfer tax reduction approved in Andalusia for the year 2021 comes into force today

Since the declaration of the COVID-19 pandemic, the Governing Council of the Regional Government of Andalusia has been gradually adopting a series of measures with the intention of alleviating the serious effects that it is producing in the Autonomous Community of Andalusia.

For this reason, and with exclusive validity until the 31^st of December 2021, the tax on Transfer Tax and Stamp Duty is reduced with the aim of promoting the promotion and economic reactivation of the Autonomous Community of Andalusia.

The Transfer Tax and Stamp Duty, better known as ITP (Impuesto de Transmisiones Patrimoniales y Actos Jurídicos Documentados), is an indirect tax levied on three different taxable events: onerous transfers of property, corporate transactions and documented legal acts.

Put more simply, this tax is levied on the purchase of a second-hand car or home and also on rentals (transfer tax); the increase or reduction of capital in companies (corporate transactions), as well as legal acts (documented legal acts), such as the public deed of sale of a home or the deed of execution of a mortgage.

Property Transfer Tax for housing

As we have already mentioned, Transfer Tax affects transactions such as the purchase and sale or rental of housing. The taxpayer, i.e. the person who is obliged to pay it, is the person who acquires the use of the property: the buyer in the case of the sale or purchase of a property and the tenant in the case of rental. The purchaser of the property has to pay a percentage of the actual price of the property. In order to avoid double taxation, it does not apply to transactions subject to VAT. For example, the purchase and sale of a property will be subject to VAT when the seller is the builder, and to ITP when the seller is a private individual.

Until today, in Andalusia, the applicable rate was 8, 9 and 10% depending on the taxable base. According to Decree Law 7/2021 of 27 April, the general tax rate applicable to the transfer of real estate and to the constitution and transfer of real property rights, except for guarantee rights, is reduced to a single general rate of 7%.

Documented legal acts

The Stamp Duty Tax (AJD) is levied on all legal acts that are documented in any of the following forms:

- Notarial documents

- Commercial documents

- Administrative documents

According to Decree-Law 7/2021 of 27 April, the general tax rate for notarial deeds is reduced from 1.5% to 1.2%.

This measure is part of the package of measures proposed by the Junta de Andalucía to alleviate the crisis situation generated by Covid-19. According to the Junta itself, it is necessary to continue implementing tax support measures aimed at mitigating the possible impact that the economic containment scenario may have on the Andalusian economy.