SYSTEM FOR THE APPLICATION OF THE REDUCED TAX RATE ON PROPERTY TRANSFERS

If we focus on Andalucía, and in detail on what is picked up on in art.25, Legislative Decree 1/2009, 1st September, it is possible to apply a reduced rate of 2% for the purchase of properties by natural or legal persons who pursue a business activity to which the adaptation norms of the General Plan for Accounting in the Property Sector are applicable, and whenever the following requirements are fulfilled:

1. That the purchaser includes the property in their floating assets
2. That the property purchased is subject to transfer within the five years following its purchase, with hand-over of the property whenever the transfer is once again subject to ITP-AJD1

The fulfillment of these mandatory requirements should be credited in order to be able to apply the 2% reduced rate (and should be recorded in public writing).

Therefore, it is very important that the company is released in the I.A.E.2 with the buying and selling real estate activity, and that the company’s accounting is adapted to the Property Sector Accounting Plan (thus the purchased property will form a part in the Balance of the Company of the current asset under the heading “Supply” and that the property purchased is transferred, and the hand-over of ownership is credited whenever the operation is subject to ITP-AJD.

As evidence of the company’s activity, together with the discharge in the IAE and the accounting adjustment, (the operation) should continue as follows:

• Once the property is purchased under this premise, it must be put on the market with written evidence from different property agencies
• All the purchase offers received must be made in writing and kept in the company’s archives.

As an added recommendation, the property should not be let during the sale process since this operation could distort the concept of floating property assets supply, causing it to be considered a fixed asset.

If any of the requirements mentioned above are not fulfilled, the following tax consequences could apply:

• The 8% that has not been paid in the purchase must be paid.
• Interest must be paid for the amount that stopped being paid (in) at the time of purchase.
• A penalty will be enforced.

Rafael Guerrero - FERS S.L.