Tax reductions and aid for first-time, young and family buyers

Terms used

• ITP — ITP is the regional transfer tax you pay when buying a resale home.
• AJD — AJD is the stamp duty paid on documents such as new-build purchase deeds.
• Aval ICO — The aval ICO is a state guarantee, run through the Instituto de Crédito Oficial, covering part of a mortgage for young and family buyers.
• IPREM — The IPREM is a public income index used as the yardstick for income ceilings in housing schemes.
• Empadronamiento — Empadronamiento is registration of your address with your town hall, which proves where you live.
• Modelo 600 — The modelo 600 is the regional tax return used to declare and pay ITP or AJD.

Key rules

• Claiming: You must claim the reduced rate yourself on the tax return, with proof attached; it is not applied automatically.
• Main home: Nearly every reduction and the state guarantee require the home to be your main residence.
• Madrid: Madrid has no general reduced rate for young, family or disability buyers.
• Newcomers: Legal residence is usually not itself a condition, but each region sets its own rules.
• Refund: If a reduction was missed, you can ask for a refund within four years.

Rates, age limits, price caps and whether the state guarantee is open change often; confirm current figures with the regional tax agency, your bank and the ICO.

Do newcomers qualify?

Often yes. Most reductions depend on your age, family or disability situation and on using the home as your main residence. They do not usually depend on your nationality or on how long you have lived in Spain. A non-EU newcomer who is legally resident, or who registers at the address, can often qualify. Conditions differ by region, so check the region where you plan to buy.

Regional ITP and AJD reductions

ITP is the transfer tax you pay when buying a resale home. AJD is the stamp duty on new-build purchases. Each region sets its own rates, so reductions are regional.

• Most regions with reductions offer a lower ITP rate to buyers under a set age (usually 35), large families and people with disabilities, usually for a main home.
• Catalonia, Valencia, Andalusia, Murcia, the Balearics and the Canary Islands each set their own rate, age limit, price cap and conditions.
• Madrid has no general reduced rate for these groups.
• Some regions also run grants for young buyers, or for buying in small or depopulated towns. These open and close with regional budgets, so ask the regional housing department what is open now.

Expect three kinds of limits: a maximum purchase price, a maximum income or tax base, and a duty to live in the home. Some regions also require you to register at the address (empadronamiento) within a set period, or to live there for a minimum number of years. Miss one of these and you can lose the reduction.

Navarra and the Basque Country have their own tax systems. Ask their tax offices directly.

The state guarantee (aval ICO)

The aval ICO is a state-backed guarantee on part of your mortgage. It lets banks lend a very high share of the price. It targets young people and families with children. It has an age limit, an income ceiling tied to the IPREM index, and a requirement that the home be your permanent main residence.

The conditions are tied to legal residence in Spain, so a legally resident foreigner can in principle apply. Whether the scheme is open, and on what terms, depends on the latest government decision and on whether your bank takes part. Ask your bank first, then check the current terms with the ICO and the Ministry of Housing.

How to claim a reduction

The reduction is not automatic. You claim it yourself on the regional tax return (modelo 600) and attach your proof. That usually means proof of age, residence or income, and a signed statement that the home will be your main residence. The documents list below shows what to gather.

File and pay within 30 working days of signing the deed. In some regions the deadline is one month, so confirm it with your regional tax agency.

If the reduction was missed

If you paid the full rate or the reduction was wrongly applied, file a rectification of your return and ask for a refund (devolución de ingresos indebidos) from the regional tax authority. You have four years to do this.

Where to start

Buyers should start with the regional tax agency of the region where they plan to buy. Ask which reduced rate fits your age and situation. Then ask your bank about the aval ICO. The checklist and timeline below set out the order.

Timeline and deadlines

• Gather proof of age, residence or income and the main-residence statement: before you sign the deed

• File a rectification and ask for a refund if the reduction was missed or wrongly applied: within four years of filing the return

Documents you need

• Proof of age, such as your passport or residence card, to attach to the tax return when the reduction depends on being under a set age.

• Proof of residence or registration at the address (empadronamiento), issued by your town hall, when the region requires you to live or be registered there.

• Proof of income, such as a tax return, when the reduction or the state guarantee has an income ceiling.

• A signed statement that the home will be your main residence, attached to the return when you claim the reduced rate.

Checklist

• Ask the regional tax agency of the region where you plan to buy which reduced ITP rate applies to your age and family situation.

• Check the price cap, income limit and the duty to live in the home that come with the reduction.

• Confirm whether your region requires registration at the address (empadronamiento) within a set period or a minimum number of years living there.

• Ask your bank whether it takes part in the state guarantee (aval ICO) and whether the scheme is currently open.

• Check with the regional housing department whether any grants for young buyers or for small towns are open.

• Claim the reduced rate on the regional tax return and attach your supporting documents.

• File a rectification and request a refund if the reduction was missed, within four years.

Frequently asked questions

Does Madrid have a reduced transfer tax rate for young buyers?

No, Madrid has no general reduced ITP rate for young, large-family or disabled buyers. Catalonia, Valencia, Andalusia, Murcia, the Balearics and Canarias each set their own rate, age limit and price cap, so compare them if you can choose where to buy.

Can a non-EU newcomer get a regional ITP reduction?

Yes, a non-EU newcomer can often qualify if the home will be their main residence and they meet the region's age or income limits.

Can a foreigner use the state guarantee (aval ICO) for young buyers?

Yes, foreigners with legal residence in Spain can in principle apply, as long as they meet the age and income limits and the home is their permanent main residence. The Instituto de Crédito Oficial backs part of the loan so a bank can lend a very high share of the price.

What if I missed the reduced rate when I filed the return?

You can file a rectification of your self-assessment and ask the regional tax authority for a refund. You have four years to do it. Gather the same proof you would have attached at the start, such as age, residence or income.