The Tax on Documented Legal Acts (Impuesto de Actos Jurídicos Documentados) is one of the most relevant elements when buying a property in Spain. Although it is not as well known as VAT, its economic impact on real estate investments can be significant.
For your convenience, at Domoblock we will show you a modern, transparent, secure and profitable method to invest in real estate sector. This way, you won’t have to worry about the risks inherent to traditional tax procedures.
We can define the Tax on Documented Legal Acts (Impuestos de Actos Jurídicos Documentados, AJD) as a levy related to notarial and commercial registry deeds. It is regulated by Royal Legislative Decree 1/1993, and therefore constitutes an indirect tax. It is also important to note that it is linked to administrative acts.
This measure was approved by the Consolidated Text of the Law on Transfer Transfer Tax and Documented Legal Acts. The above is important because it demonstrates the scope of the tax when collecting revenues. Many jurists have stated that its application is very transparent.
The purpose of this tax is to levy the economic value represented by the formalisation of certain legal acts, such as sales. Similarly, it is linked to company formation and the granting of mortgage loans by financial institutions.
The complexity of taxpayers’ payments is due to legal reforms. Previously, the AJD in property sales was paid by the buyer. However, the Supreme Court ruling in 2018 established that in mortgage loans the bank would be responsible for the payment.
Despite the case mentioned above, whenbuying a new property, the buyer is the one subject to the payment. In contrast, when dealing with a second-hand property, the Tax on Documented Legal Acts does not apply; instead, a Transfer Tax (Impuesto de Transmisiones Patrimoniales) is due.
As you can see, everything depends on the scenario, so there is no rule that applies universally. If your budget is tight, the best alternative is to opt for a second-hand property. But if you are the lender, you must be careful with the value of mortgage loans. loans.
You might be interested in: reservation agreement for a property.
There are not many documents related to these taxes. Basically, it is divided into three groups that, in turn, belong to different sectors of the public administration. This versatility allows for faster and more efficient tax collection. See the types of documented acts available:
Below we will explain in depth the characteristics of these documents and their relationship with indirect levies. We will also indicate an approximate amount according to the type of legal act so you have a clear idea of the respective tax.
These are the subject of the most common procedures, for example minutes and any notarial attestation with economic content. Additionally, property registrations, mortgage loans and declarations of new works (such as public and private construction projects) are included.
All documents related to commercial transactions are subject to the Tax on Documented Legal Acts. Bills of exchange and promissory notes are the most frequent cases. In short, these are the main transactions of companies and corporate law.
They include administrative concessions, license transfers and administrative awards. These are less common in the life of the average citizen, but they are relevant in transactions with the public administration. The purchase of street furniture is another example of such documented acts.
It all depends on the autonomous community you belong to, but in general the rate falls between 0.5% and 1.5% of the total value stated in the deed. It should be noted that mortgage loans also fall into this category; however, remember that the payer must be the loan grantor.
That said, regions such as Madrid have a higher rate, currently 0.75% for standard transactions. In Catalonia, it can reach up to 1.5%, so you should analyse your location when assuming the tax obligations of these transactions. It all depends on the autonomous community you belong to, but in general the rate falls between 0.5% and 1.5% of the total value stated in the deed. It should be noted that mortgage loans also fall into this category; however, remember that the payer must be the loan grantor.
Now — is it smart to move to a place with a lower tax rate? The answer is yes,but it entirely depends on your business. Don’t forget to factor in other expenses, so it remains a highly complex decision. It’s important to note that the calculation method makes a difference.
It’s not a complex task — in fact, it’s simpler than you might imagine. To begin, you must follow a few elements to calculate an amount. There aren’t many, so don’t worry. The items to consider are straightforward to review. Still, take a look at the bases for the calculation:
You may have doubts about how to perform the calculations. Considering thatthis assessment can be sometimes difficult, we will outline the steps you should follow so that the Tax on Documented Legal Acts is never a problem again.
Primarily, the tax base will be determined by the value declared in the deed. For mortgages, it will be the amount of the loan capital, including all ordinary and default interest and associated costs. Of course, there are conditions that must be applied for its assessment.
Once the tax base for the applicable taxes has been determined, the relevant percentage is applied according to the autonomous community. Bear in mind that the more prestigious the location, the higher the payment you may have to make.
Some autonomous communities offer reductions. In fact, some cases include low-income familiesor for people with disabilities. Therefore, these measures will mitigate the financial burden present in most projects and initiatives.
The Tax on Documented Legal Acts must be paid within a maximum of 30 business days from the signing of the deeds. Below we explain the most important points of this complex tax area and indicate where this tax is paid.
You do not have to pay in person if that is inconvenient. You can now complete the tax payment online. This facility gives users greater flexibility when settling their taxes. Nonetheless, it is still possible to pay at the tax authority’s offices.
Form 600 is the preferred tool to declare and pay these taxes. Its content is straightforward, as it includes the transaction details, the tax base and the applicable rate. For your convenience, the notary can assist you in drafting the document.
After submitting the form and making the payment, you will receive a receipt to register the acquiredproperty in the Land Registry. Important: if you do not pay the Tax on Documented Legal Acts (AJD), the act will have no effect vis-à-vis third parties.
These taxes form part of the same regulatory framework, but they are applied differently. First, the ITP(property transfer tax) applies to resale (second-hand) properties, while the AJD is levied on new properties. Both taxes are not charged at the same time; you pay one or the other.
These taxes may be reclaimed if they were charged on a value higher than stipulated. If this applies to your case, you must go to the tax authority’s offices to request a refund. However, you will need to provide evidence that the charge was improper.
Penalties will be your main issue, you may have to face significant fines. Additionally, the act will not be recognized against third parties, meaning it will not be legally binding. Finally, the penalty related to the charge will increase as evasion occurs.
If the transaction has a high value, it may affect your budget.. To avoid this, we recommend planning your investment strategy. The most advisable approach is the tokenized real estate investment model we propose at Domoblock.
The key to success is to avoiding intermediaries and growing your capital with a single investment of €200. Thanks to our tokenization process and blockchain technology, you could see your capital increase by 10% in less than 12 months.
First and foremost, the real estate investment can be made flexibly from anywhere in the world. Diversification offers high long-term return potential. Likewise, transactions are secure and will be supported by blockchain.
Remember that investments carry risks, and it is natural to feel concerned about potential losses. AtDomoblock we are here to help. Entrust this task to us: you provide the capital and, with our strategy, we aim to grow it.
Profitability in the real estate is an achievable outcome, but you should be properly advised. If you have any questions, please contact us — we will answer all your doubts and help you invest your capital in the most appropriate way.
The Tax on Documented Legal Acts (Impuesto de Actos Jurídicos Documentados) is a required tax when purchasing a property in Spain. At Domoblock we understand this can be a complex concept, but knowing its fundamentals will help you make better financial decisions and avoid fiscal complications.
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Funded:
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Objective:
3.582.749,16 €
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