If you buy a flat from a bank in Valencia, you will normally pay Spanish transfer tax (ITP) at 9%, not VAT. Almost every bank-owned flat has been sold once already, and the second sale of a home is exempt from VAT (article 20.Uno.22 of the Spanish VAT Act, Law 37/1992), so it falls under transfer tax instead (article 7.5 of the consolidated Transfer Tax Act). You only pay VAT if the flat is brand new and this is its first sale, or if you buy as a business and the bank waives the exemption.
In this article
- Why a bank-owned flat usually means transfer tax
- How much is transfer tax in the Valencia region in 2026
- What value the tax is based on
- When the bank can charge you VAT
- New or refurbished flats: 10% VAT plus stamp duty
- Mortgage, notary and Land Registry
- Community fees and IBI: debts that come with the flat
- Example: a 150,000 euro bank flat in Valencia
- Common mistakes
- When to get help
- Frequently asked questions
Why a bank-owned flat usually means transfer tax
The VAT Act exempts second and later deliveries of buildings. The first one is made by the developer when construction ends. A flat the bank took over in a mortgage repossession has already had an owner, so when the bank sells it to you it is usually a second delivery. If the bank took it over unfinished or refurbished it, that needs checking. And when a sale is VAT exempt, the buyer pays transfer tax (articles 7.5 and 8 of the Transfer Tax Act). We explain repossessed flats in what a REO is. If you are offered a brand new one, ask whether it is a first delivery.
How much is transfer tax in the Valencia region in 2026
Since 1 June 2026 the standard rate is 9%, rising to 11% when the value is over 1,000,000 euros (article 13.Uno of Valencian Law 13/1997, as worded by Law 5/2025). For a main home there are reduced rates, protected housing included (same article 13):
- 3% up to a value of 180,000 euros and 4% above it, for large or single-parent families within an income limit, people with a disability of 65% or more (33% if intellectual or mental) and women who are victims of gender violence within an income limit.
- 6% up to 180,000 euros and 8% above it, for the first main home of buyers under 35, if their general and savings taxable income adds up to no more than 30,000 euros in an individual return or 47,000 euros in a joint one (article 4.Cuatro).
Reduced rates require a public deed signed before a notary (article 13.Siete). You have one month from signing to file and pay (article 14 ter). You can try your price in our transfer tax calculator.
What value the tax is based on
The base is the Catastro reference value on the date of purchase, unless the price or the value you declare is higher: then the highest is used. If the flat has no reference value, the base is the highest of the declared value, the price and the market value (article 10.2 of the Transfer Tax Act). On a cheap bank flat it can end up above the price. Check it on the Catastro's online portal before you sign the deposit contract (arras). If you think it is wrong, you can only challenge it afterwards, by asking for your return to be corrected or by appealing the assessment (article 10.3).
When the bank can charge you VAT
The seller can waive the exemption, and then the sale carries VAT. But only if the buyer is a business or professional acting as such and entitled to deduct all or part of the VAT on that purchase (article 20.Dos of the VAT Act). It must be formally notified before or at delivery, and the buyer signs a statement confirming the conditions (article 8.1 of the VAT Regulations).
Put simply: if you are buying a home to live in, no waiver is possible. Nor for a company buying to let as a home, because residential letting is, as a rule, VAT exempt (article 20.Uno.23) and gives no right to deduct. When there is a waiver:
- VAT on a home is 10% (article 91.Uno.1.7.º).
- You do not pay it to the bank: you declare it yourself under the reverse charge rule (article 84.Uno.2.º.e) and, if entitled, recover it in your VAT return.
- The deed pays stamp duty (AJD) at 2% in the Valencia region (article 14.Dos of Law 13/1997).
New or refurbished flats: 10% VAT plus stamp duty
On a first delivery you pay 10% VAT because it is a home (article 91.Uno.1.7.º), and no transfer tax. The deed pays stamp duty: 1.4% as a general rule and 0.1% if it is your main home (article 14 of Law 13/1997). Refurbishment has a strict legal definition (article 20.Uno.22.B): a new kitchen and bathrooms do not turn a flat into a first delivery.
Mortgage, notary and Land Registry
Stamp duty on the mortgage is paid by the lending bank. Since Royal Decree-law 17/2018, the lender is the taxpayer on mortgage loan deeds (article 29 of the Transfer Tax Act). In the Valencia region the rate is 2% (article 14.Tres of Law 13/1997).
Loan costs: the valuation is yours; admin agency, loan notary and mortgage registration are the bank's (article 14.1.e of Law 5/2019).
Notary and Land Registry fees for the sale follow official scales (Royal Decrees 1426/1989 and 1427/1989) and depend mainly on the value and the length of the deed. Unless agreed otherwise, the seller pays for executing the deed and the buyer for the first copy and everything after (article 1455 of the Spanish Civil Code). Ask the notary for an estimate. The municipal capital gains tax (plusvalía) is paid by the seller (article 106.1.b of the Local Finance Act).
Community fees and IBI: debts that come with the flat
- Community fees. You answer, with the flat itself, for what previous owners owed for the current year and the three previous calendar years (article 9.1.e of the Horizontal Property Act). The seller must bring a community debt certificate to the signing, unless you waive it. Do not waive it.
- IBI (annual property tax). The flat is tied to unpaid IBI (article 64.1 of the Local Finance Act) and the town hall can go after it as a secondary liability (article 79 of the General Tax Act), for debts that are not time-barred: the general limit is four years (article 66). The year's IBI is owed by whoever owned the flat on 1 January (article 75), unless agreed otherwise.
Anything outstanding should come off the price. Registered charges are a separate matter: charges and the land registry extract.
Example: a 150,000 euro bank flat in Valencia
A resale flat bought from a bank for 150,000 euros. Except in the second row, the reference value is not above the price. Notary, registry and valuation are left out.
| Situation | Tax | Amount |
|---|---|---|
| The usual case: you buy as an individual | ITP 9% | 13,500 euros |
| Reference value of 160,000 euros | ITP 9% on 160,000 euros | 14,400 euros |
| Under 35, first main home, conditions met | ITP 6% | 9,000 euros |
| Company entitled to deduct, exemption waived | VAT 10% (declared and deducted by the buyer) and AJD 2% | 15,000 and 3,000 euros |
| Brand new, first delivery, main home | VAT 10% and AJD 0.1% | 15,000 and 150 euros |
If you are buying to let, the tax eats into your return from day one, and with the numbers done wrong you can lose money.
Common mistakes
- Working out the tax on the price without checking the reference value.
- Waiving the community debt certificate.
- Missing the one-month deadline: if you file late but before the tax office asks you to, the surcharge is 1% plus another 1% per full month late; after twelve months, 15% plus interest for the time beyond those twelve months (article 27 of the General Tax Act).
When to get help
If you are unsure it is a first delivery, are buying through a company or face debts nobody has quantified, review the whole deal before signing the deposit contract.
Frequently asked questions
What taxes do I pay if I buy a bank-owned flat in Valencia?
Transfer tax (ITP) at 9% if it is a resale, the usual case, on the price or the Catastro reference value, whichever is higher. If it is brand new and a first delivery, 10% VAT plus stamp duty of 1.4%, or 0.1% if it is your main home.
Can the bank charge me VAT on a resale flat?
No, not if you buy as an individual. It can only waive the exemption if you are a business entitled to deduct (article 20.Dos of the VAT Act). Then you pay 10% VAT, which you declare yourself, plus 2% stamp duty.
Who pays the tax on the mortgage?
The lending bank. Since Royal Decree-law 17/2018 the lender is the taxpayer for stamp duty on mortgage loan deeds (article 29 of the Transfer Tax Act).
Do I have to pay the previous owner's community fee debts?
Yes, up to a limit: the flat answers for the current year and the three previous calendar years (article 9.1.e of the Horizontal Property Act).
How long do I have to pay transfer tax in the Valencia region?
One month from signing the deed (article 14 ter of Law 13/1997). If you are late, a surcharge applies.