Madrid property tax: 6% ITP and the AJD scale

ITP on resale homes: 6%, and what can lower it

Article 28 of Madrid’s tax decree states the general rule: for transfers of real estate “se aplicará el tipo del 6 por 100”. It has applied since 1 January 2014 (Ley 6/2013).

Two mechanisms can reduce it, and they cannot be combined:

• 4% for large families (art. 29). The buyer must be the holder of a familia numerosa title, and the home must become the family’s main residence. If the buyer owned a previous main residence, it must be sold within two years before or after the purchase (not required when the new property is next to the current one and merged with it). If the home is not occupied within 12 months or not kept as a main residence for three years, the buyer must file a corrective self-assessment at the general rate, with late-payment interest, within one month of the breach.
• A 10% reduction of the tax quota (art. 30 bis, rewritten by Ley 5/2024, in force since 29 November 2024). Individuals buying a home that will be their main residence may reduce the ITP by 10%. The reduction rises to 100% when the buyer is under 35 and the home is in a municipality with fewer than 2,500 inhabitants on 1 January of the previous year (INE figures). The value of the home must be €250,000 or less, counting parking spaces and annexes sold with it even if they are separate registry entries. The same one-month rule applies if the occupation conditions fail. The reduction is incompatible with the 4% rate of art. 29.

Above €250,000 the reduction is not available at all: there is no partial relief on the first €250,000.

AJD on a new home: a three-step scale with a smoothing rule

If you buy from a developer, VAT replaces ITP (the national 10% rate on homes, art. 91 of the VAT law). The first copy of the notarial deed then pays AJD. Madrid’s art. 32 sets the rates for an individual buyer of a home, by the “valor real” of the home, parking and annexes included:

A 0.2% rate applies to certain public-protection homes of up to 90 m² of usable area. Deeds for acts not covered by the earlier articles pay 0.75% (art. 36).

Smoothing (art. 37). The rate depends on the band, so a step in value could create a step in tax larger than the step in value itself. The decree prevents it: when a rise in the base produces a rise in tax greater than that rise in base, “se reducirá la cuota resultante en la cuantía del exceso”. Calculation as an illustration: at €120,000 the tax is 0.4% = €480; at €120,001 the raw 0.5% would be €600.01, but the tax may not rise by more than the €1 added, so it is €481. The same reasoning applies at the €180,000 threshold. The effect disappears a few hundred euros above each threshold.

A separate 10% bonus on the AJD quota exists for a main residence (art. 38 bis, up to €250,000, same 100% case for under-35s in small municipalities).

Worked example (calculation, not a quote)

• €300,000 resale, general rate: 6% × €300,000 = €18,000. No 10% reduction, because the value is above €250,000.
• €240,000 resale, main residence, individual: 6% = €14,400; less 10% (€1,440) = €12,960.
• €300,000 new home, individual buyer: 10% VAT = €30,000; AJD 0.75% × €300,000 = €2,250, with no smoothing effect at that value.
• €150,000 new home: AJD 0.5% = €750 (smoothing does not bind this far above €120,000).

The tax base is the higher of price, declared value and Catastro reference value on the transfer date (national art. 10). See the Catastro reference guide.

What non-resident and foreign buyers should know

The Madrid articles read here set no separate rate for non-residents. What matters is intended use: the 4% rate and both 10% bonuses require the home to be the buyer’s vivienda habitual, defined by the personal income tax rules and occupied effectively within 12 months. A buyer who lives abroad and uses the flat occasionally pays the 6% rate in full. The national rules on who owes the tax are the same everywhere: the buyer is the taxpayer of ITP “cualesquiera que sean las estipulaciones establecidas por las partes en contrario” (art. 8.a). Allow time for your Spanish tax number; see the NIE guide.

Filing

The tax is paid by self-assessment (autoliquidación) and is administered by the Madrid regional finance department: the decree gives its Consejería the power to set the declaration models and to allow electronic filing. The forms and deadline for ITP and AJD were not part of this reading, so confirm them with the regional tax office or the professional preparing your file.

Where people buy

In Payotte’s data the Madrid entry is the capital itself. The rules above apply in every municipality of the Community, except that the 100% reduction depends on the size of the municipality.

Which professional to consult

A lawyer registered with a Spanish bar association (colegio de abogados) can check the €250,000 limit against the value in the deed, including parking spaces; see property lawyers.