VAT vs Transfer Tax in Galicia: What Taxes You Pay When Buying New or Resale Property

VAT vs Transfer Tax: two different taxes for two types of purchase

When buying property in Galicia, the tax you pay depends on the property type: new builds (first deliveries) are subject to VAT (IVA); resale properties are subject to Transfer Tax (ITP). Understanding this difference can save you thousands of euros.

VAT on new property in Galicia

• Standard rate: 10% (reduced from 21% general rate)
• Social housing (VPO): 4%
• Garage spaces (max 2): 10% if bought with the property
• Rural land: 21%
• Commercial premises: 21%

Transfer Tax (ITP) on resale property in Galicia

Reduced rates of 5% for:

• Buyers under 35 (up to €180,000)
• Large families (up to €180,000)
• People with disabilities (up to €180,000)
• Properties in municipalities under 5,000 inhabitants (up to €150,000)

AJD: the accompanying tax

• With VAT purchase: 1.5% (collected by notary)
• With ITP purchase: Already included in ITP rate

Cost comparison: new vs resale (€150,000)

Real example in Costa da Morte (€180,000)

New build: VAT €18,000 + AJD €2,700 = €20,700 total taxes

Resale: ITP 8% = €14,400 total taxes. Difference: €6,300 in favor of resale.

Under 35 buyer: ITP 5% = €9,000. Difference vs new: €11,700.

Strategies to minimize taxes

• Use reduced rates if eligible (under 35, large family)
• Buy in small municipalities (under 5,000 inhabitants) for 5% ITP
• Always calculate total fiscal cost, not just the main tax