VAT and transfer tax when buying a protected home: which rate you pay

The VAT Act taxes the first delivery: the one a developer makes of a home whose construction has been completed. Everything else, the "second and later deliveries of buildings", is exempt from VAT and pays ITP instead. The same law makes clear that a sale by the developer after using the home without interruption for two years or more is not a first delivery: a development the developer has rented out and then sells pays ITP.

For a protected home (VPO) this means: a new development bought from the developer pays VAT; a VPO a private seller sells you at the maximum price pays ITP. And the ITP rate is set by your region (comunidad autónoma), not by the State.

Under article 91.Dos.1.6.º, the super-reduced 4% rate applies to (our translation) "homes administratively classified as official protection homes under the special regime or of public development, when they are delivered by their developers, including garages and annexes located in the same building that are transferred together. For these purposes, the number of garage spaces may not exceed two".

In other words: the classification must say special regime (régimen especial) or public development (promoción pública). A general-regime VPO, a VPPB in Madrid, a concertada home or a precio tasado home pays 10%, the same rate as any new home. The phrase "VPOs pay 4%" is only true for some of them, and on €150,000 the difference is €9,000.

On a maximum price of €150,000 with a linked garage space of €15,000: under the special regime VAT is 4% of €165,000, so €6,600; under the general regime it is 10%, so €16,500. On top of that come the stamp duty (AJD) on the deed, notary, land registry and agency (gestoría), which the costs guide breaks down. No VAT rate can be applied to a price above the maximum legal price: the maximum is the one in each region's price tables.

Each region regulates ITP in its law on devolved taxes, and several apply a reduced rate when what you buy is a protected home, or when the buyer is young or has a large family. We do not give any figure here that we have not read in the law: check your region's tax agency and save the page with the date. You file and pay it yourself (autoliquidación) with that agency within the deadline set by the tax regulations, and the purchase price is still capped by the protection.

Paying the right tax rate does not give you access to the home: to buy a VPO, new or second-hand, you must be within your region's income cap (calculator) and, for new ones, apply through a call for applications (convocatoria).