THE NEW ITP LAW IN CATALONIA IS NOW IN EFFECT

Today marks the official entry into force of the new regulation on the Property Transfer Tax (ITP) in Catalonia, which introduces major fiscal changes to the purchase of second-hand homes. Approved under Decree-Law 5/2025, this reform aims to create a more progressive tax system aligned with current market realities and social circumstances.

At BHHS Spain, we outlined the key points on our blog weeks ago. Now that the legal framework is fully applicable, it's essential to understand how it affects both buyers and real estate professionals.

Progressive tax brackets based on property value

Until now, the ITP for second-hand home purchases in Catalonia was subject to a general rate of 10%. With the new law, this model is replaced by a progressive bracket system, in which different tax rates are applied to each portion of the property’s value:

- First €600,000 → 10%

- From €600,001 to €900,000 → 11%

- From €900,001 to €1,500,000 → 12%

- Over €1,500,001 → 13%

This system works cumulatively, similar to personal income tax (IRPF). As a result, buyers of lower-priced homes pay a lower effective tax rate than those purchasing high-end properties.

20% flat rate for large-scale landlords and entire buildings

Additionally, the law sets a flat 20% ITP rate in two specific cases:

- When the buyer is a "large landlord" (more than 10 properties or more than 1,500 m², or over 5 properties in stressed housing areas).

- When acquiring an entire residential building, except if the buyer is a private individual purchasing up to 4 homes intended as a primary residence for themselves or their relatives.

Reduced 5% rate for vulnerable groups

The reform also maintains a reduced 5% rate for certain social groups, under specific conditions. To qualify, the property must be used as a primary residence and the buyer must meet eligibility requirements:

- Young people up to 35 years old with annual income ≤ €36,000
- People with disabilities equal to or greater than 65.
- Large or single-parent families
- Victims of gender-based violence
- Purchase of protected (VPO) housing or by non-profit social entities

All cases must be properly documented and justified at the time of signing.

Implications for buyers and real estate professionals

With this new law in force, buyers must carefully assess whether their transaction qualifies for any special brackets or reduced rates. All requirements must be met and certified when the purchase is formalized.

For sellers and real estate agents, it’s critical to inform clients accurately, assist with the necessary documentation, and help avoid overpaying on taxes due to lack of information.

A more progressive and realistic fiscal framework

Through this reform, Catalonia takes a step toward a fairer system that increases fiscal progressivity while protecting vulnerable groups. While it introduces greater complexity in calculating ITP, it also opens the door to considerable tax savings for those who meet the criteria. In such a dynamic real estate market, being well-informed makes all the difference.

To understand the exact tax impact and see practical examples, check out the original article on our blog and make sure you're prepared for this new legal framework.