There is only one way to kill capitalism: with taxes, taxes, and more taxes.
“Karl Marx”
Taxes have always been one of the concerns of every citizen, and this famous quote by Karl Marx is quite indicative.
In the context of our business, we must provide detailed advice on the taxes levied on the purchase and sale of a home.
On this occasion, we will discuss the Stamp Duty (AJD), which raises certain concerns and fears, which can be dispelled if the topic is approached specifically and with a practical and simplified approach.
What is the Stamp Duty?
The AJD is an indirect tax included in the Tax on Property Transfers and Documented Legal Acts (ITPAJD), regulated by Royal Legislative Decree 1/1993, of September 24.
This tax applies to three things:
Notarial documents
Commercial documents
Administrative documents
The tax that truly interests us as real estate agents is the first, that is, notarial documents, and especially public deeds that document acts that can be registered in the Property Registry, such as a home purchase and sale.
When does the Stamp Duty apply and who pays it?
The Stamp Duty is payable when a public deed is executed that has economic content, is registrable in a public registry, and is not subject to the Transfer of Property Tax (ITP) (due to onerous property transfer).
This typically occurs in:
The purchase and sale of a new home (subject to VAT)
The establishment of a mortgage
The declaration of new construction
The horizontal division of a property
The extension of a mortgage loan
The elevation to public ownership of private contracts with registry significance.
Article 31.2 of Royal Legislative Decree 1/1993 establishes that the tax will be levied on “the first copies of deeds and notarial acts, when they relate to a sum or valuable item, and contain acts or contracts that can be registered in the Property, Commercial, or Movable Property Registries.”
Regarding who pays the AJD (AJD), traditionally, it was paid by the buyer. But everything changed in 2018 when, following a Supreme Court ruling, the government intervened through Royal Decree-Law 17/2018, of November 8, and amended the Stamp Duty Law so that the Stamp Duty (AJD) for mortgage loan originations is paid by the bank, not the client.
This was reflected in the new Article 29 of the law, which states: “In the case of loan deeds secured by a mortgage, the lender shall be considered the taxpayer.” That is, if your client signs a mortgage, it is no longer they who pay the Stamp Duty, but the bank. But be careful, in all other cases (such as the purchase of a new home), the buyer remains liable for payment.
How is the Stamp Duty calculated and when is it paid?
The Stamp Duty (AJD) is calculated by applying a tax rate to the value declared in the deed (for example, the purchase price of a new home). This rate depends on each autonomous community, as this tax is assigned to the autonomous communities and therefore varies, although in most communities it ranges between 0.5% and 1.5%.
The buyer has 30 business days from the date the deed is executed to self-assess the tax using Form 600, which must be submitted to the corresponding autonomous community. To do so, the buyer must provide a certified copy and a certified copy of the deed, a DNI/NIE (National Identity Document), and a cadastral reference number (in the case of real estate). Remember that if this deadline is missed, there are surcharges, so it’s best to keep everything under control.
Contact us here www.inversionesgrup.com if you have any questions or concerns. We will be happy to assist you without obligation.
