Property transfer tax for used car
Among the mandatory expenses when buying second-hand vehicles is the ITP or Property Transfer Tax. An additional amount that should be known when evaluating whether an operation interests us or not.
Buying a second-hand vehicle is an interesting operation for those people who do not see the need to buy a new car or for those who want to have a specific vehicle, but prefer to pay less for it, getting a used model. In all these cases, the sales process is subject to a series of expenses and taxes that should be known, since they considerably change the cost of the car’s transmission and also the total amount of the operation.
One of the most important amounts, due to its cost, is the property transfer tax on vehicles. This tax is levied on the transmission of the vehicle and it is key to comply with its payment. If you do not do so, the DGT will not authorize you to change the owner of the vehicle until you have settled it correctly. For this reason, it is important to know this tax and the way in which it is managed.
What is the property transfer tax
The ITP or Tax on Property Transfers and Documented Legal Acts is an indirect rate that mainly affects three types of operations: onerous property transfers, corporate operations and documented legal acts.
In the case at hand, it is the first aspect that requires the payment of this tax. The sale of a second-hand vehicle involves a transfer of assets, the aforementioned vehicle, in exchange for an economic amount. Something similar happens when we sell or buy a home or a parking space. In these two cases, it would also be necessary to pay this tax, as part of the process of selling the property. Therefore, it is another amount to consider when assessing the transfer price of the car that we have in hand.
Who pays the transfer tax of the used car
This is one of the aspects that generates the most controversy when it comes to paying the tax. However, the law is very clear on this. The obligation to declare and pay the property transfer tax of a used vehicle corresponds to the buyer , who is the person who initiates the operation, so to speak. Therefore, this will be responsible for its management and its payment in the corresponding regional administration.
However, this does not mean that payment is exclusively up to the buyer. It is true that the money will be paid by the buyer, but if the parties agree that this payment will be made by the seller, paying the amount to the buyer, or that it be paid between both parties, it is also possible to do so. It is the same thing that happens if the used car has a tire (if you click here, you have several purchase options) in poor condition. This can be changed by the buyer, by the seller or paid in half, along with the rest of the repairs and revisions that the vehicle requires. It’s all a matter of negotiation.
How much does the ITP cost?
This question has a rather complex answer. On the one hand, the amount of the tax varies depending on what each autonomous community establishes. In fact, it is common for many to have different scales in the valuation of used vehicles. To do this, parameters such as age, power or engine displacement are used. The result is a series of percentages, which are applied to the market value or tax value of the car involved in the transfer.
As a reference, in Andalusia 4% is paid in general and 8% for vehicles with more than 15 fiscal horses. In Catalonia, a general rate of 5% is applied, exempting mopeds and vehicles over 10 years old that are not historic and have a value of less than 40,000 euros. In Madrid, a general rate of 4% is applied for all types of vehicles.
To know the amount precisely, there are pages on the web with which to calculate the transfer of the car in the DGT, which include both the cost of the aforementioned ITP and the rest of the associated costs, such as traffic rates and the like. A very practical solution when it comes to knowing how much it costs to transfer a specific car.
How to pay the ITP
To pay the ITP it is necessary to execute two different steps. The first of them is to proceed to the tax declaration, using the corresponding official form. This document contains all the data of the operation, including those of the buyer, the seller and the vehicle in question. It is important to fill in the document correctly, since if we do not do so, we may have to retrace the process.
The second step is the liquidation and payment of the tax . The administration evaluates the data that we have delivered and pays the tax settlement for the corresponding amount. As we said in the previous point, this amount depends both on the market value of the vehicle and on the percentages that apply to it, according to the corresponding legislation. This amount must be paid by the buyer in any collaborating banking entity of the administration, through the payment letter that is delivered to us for it.
It is important to know that the tax is declared before the tax office of the autonomous community in which the new owner resides, following the principle of obligation for the buyer. On the other hand, the term to resolve this procedure is 30 days from the date of the purchase agreement, which will also be necessary to present during the processing of the tax.