Concept of first delivery of dwellings (new dwellings)
The'first supply' of dwellings is understood to be that which is purchased from the developer when the construction or refurbishment is completed, unless the dwellings have been used continuously for a period of two years or more by persons other than the purchasers.
That is to say, if the developer, once the works have been completed, rents the dwellings and after two years puts them up for sale, if the dwellings are purchased by the tenants themselves, the delivery of the dwellings is a'first instalment', but not if the dwellings are purchased by different persons.
The construction of a dwelling is considered to be completed when a certificate of completion is issued by the architect and quantity surveyor who directed the work.
The first deliveries of dwellings (new dwellings) are subject to Value Added Tax (VAT).
The second and subsequent deliveries of dwellings (used dwellings) are subject to the Transfer Tax (ITP).
Housing concept and VAT rate applicable to purchase and lease-purchase
Traditionally, the Directorate General for Taxation defines housing as "a building or part thereof intended as the dwelling or dwelling of a natural person or a family, constituting its home or the seat of its domestic life".
Law 37/1992, of 28 December 1992, on value added tax, does not expressly define what is meant by a dwelling for VAT purposes; however, when it establishes the tax rate applicable to the supply of the same, it stipulates that the reduced tax rate of 10% shall be applied to the supply of buildings intended mainly for residential use (buildings in which at least 50% of the constructed area is used for residential use), including garages and annexes located thereon which are transferred together and, provided that the number of garage spaces to be allocated to each owner does not exceed two units.
The purchase of a new home implies for the buyer the obligation to pay Value Added Tax. The VAT borne by the buyer is the result of multiplying the price of the same by the tax rate in force at the time of purchase. The payment is made to the seller who, in turn, will pay the tax into the Treasury.
The currently established tax rates are:
10% in general.
4% in the case of subsidised housing under the special regime or for public promotion.
In the case of leases with an option to purchase buildings or parts thereof intended exclusively for dwellings, including up to two garage spaces per dwelling and annexes located thereon which are rented together, before exercising the option (provision of services), the tax rates of 10% and 4% shall be applied in the case of subsidised housing under the special regime or for public promotion.
The purchase of a used property implies for the buyer the payment of the Onerous Property Transfer Tax which he will pay himself into the Regional Treasury corresponding to the place where the property is located.
Translated with www.DeepL.com/Translator