When buying a property, some taxes determine the final price of the operation. Among the most important initial expenses are the VAT and the Tax on Patrimonial Transmissions (ITP) and Documented Legal Acts (AJD). The VAT is paid in the case of a new home and the ITP and AJD in the case of a second-hand home. The Supreme Court has finally confirmed the distribution of the expenses of the mortgage loans and, after deciding that the appraisal has to be paid by the bank, only the AJD will be borne by the consumer.
He Tax on Documented Legal Acts (AJD), popularly known as the mortgage tax, is a rate that is calculated on the deed made public before a notary public and that is levied on the notarial, commercial and administrative documents associated with the sale of a home.
The (AJD) is regulated in articles ranging from 27 to 44 of Royal Legislative Decree 1/1993, of September 24, which approved the Consolidated Text of the Law on the Tax on Patrimonial Transmissions and Documented Legal Acts.
In Spain, the percentage that is paid for the tax depends on several factors: on the one hand, on the autonomous community in which the loan is formalized and, on the other hand, on the value or amount of the mortgage. The percentage that is applied is between 0.5% and 1.5% on the mortgage liability. Thus, the difference between regions is quite significant.
The communities that apply a higher tax (1.5%) are Andalusia, Aragon, Valencian Community, Castilla y León, Catalonia, Galicia and Murcia. On the opposite side, the communities that apply a lower percentage (0.50%) are Ceuta, Melilla, Navarra and the Basque Country. Castilla-La Mancha applies 1.25%; Asturias, the Balearic Islands and Extremadura apply a tax of 1.2%; Canarias, Cantabria and La Rioja apply 1% and, finally, Madrid applies a rate of 0.75%.
“It should be noted that many autonomous communities offer reductions, or even extinctions, of this tax. The objective is to facilitate access to housing for different groups: large families, young people or people with disabilities, among others,” they highlight from the Bankinter blog .
For example, to calculate the AJD, if we take the Community of Madrid as a reference, the tax is 0.75%. It must be multiplied to the Mortgage Liability (principal + ordinary interest + default interest + costs and expenses) which, let’s say, is 350,000 euros. Thus, € 350,000 x 0.75% = 2,625 euros.
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