ITP 2%

Due to the last economic crisis, the Andalusian community has, just as other communities did, implemented a tax reduction regulation for the property purchase in order to relaunch the real estate sector. Thus, by Royal Decree-Law 1/2009 and 8/2010, a 2% reduction of the Property Transfer Tax has been approved, as long as it fulfills specific requirements, and as long as the purchased property is being sold within a period of five years. What are the established requirements?

That the natural or legal person should purchase the property within the exercise of their business activity to which the Real Estate Agent’s Chart of Account (Plan General De Contabilidad Del Sector Inmobiliario) can be applied. That the purchased property should be incorporated into the current assets of the company, i.e, the property has to be on sale. The purchased property should be sold within a five-year period after its purchase. Additionally, the purchase should be subject to Property Transfer Tax. In that way, the purchases subject to VAT are excluded.

From a formal point of view, we can see how important it is to expressly mention the previous

requirements in the public title deed and the registration in the corresponding section of the

CNAE (National Classification of Economic Activities). Then, the tax must be settled at the

reduced rate of 2% within thirty business days after the granting of the deed. This implies a

considerable saving in the purchase of the property.

In the event of non-compliance of one of the aforementioned requirements, the difference

between the applicable rate and the reduced rate paid at the purchase shall be settled.

The effect of this law, beyond the scenario in which it has been established and approved,

supports and improves the investment. It also eases the heavy burden of purchase costs,

sometimes at a non-competitive price, and, needless to say, it contributes to stimulate the

market.

This law can make the investment exceptionally attractive. Indeed, if the companies manage to

purchase and sale the properties within two years, they can, in addition to the reduced rate of

2% of the property transfer tax, have a tax base set a 15% instead of 25% for the Corporate tax.

Beyond the idea of how attractive the lifestyle of Costa del Sol is, and beyond all the efforts

made to promote this idea and make it real, it is important to make our lifestyle more and

more appealing For that, we must use everything we have in our power to encourage the

investors and enable them see that Costa del Sol is a safe asset with a good price and a

reasonable investment cost.