The Minister of Finance has raised the possibility to have the transfer tax (ITP) lowered in Spain because currently there is an unbalance between buying a new home (with  4% VAT) and a second hand home (between 7%, 8% and 10% according to the varying regions and housing prices)

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Even though the local regions have control over the transfer taxes, it is the Spanish government that holds the power to reduce the tax rate, which are not small amounts considering the difference between the transfer taxes of buying a new and existing property. .

Since the start of crisis there has been a shift in the buying habits of preferred buyers, who have gone from purchasing new properties, to the searching and buying of existing properties, according to local reports. However, the financial advantage of buying a new property is far greater, since the buyer only needs to pay a transfer tax of 4% as opposed to 7% in Madrid, 8% in some communities such as Catalonia and Extremadura and up 10% depending on the value of the home as in the case of Andalusia.
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The new government, the Popular Party, are determined to remove such inconsistencies for the consumers and are aiming to reduce the transfer tax on existing housing, but the impact and amounts that are involved remain to be seen.

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