Buying & selling · · 10 min read
Madrid Cuts Property Transfer Tax (ITP) to 4% for Under-40s from 1 January 2027: Requirements, Savings and What Happens If You Buy in December
The Comunidad de Madrid (Madrid regional government) has announced that buyers under 40 will pay 4% property transfer tax (ITP) instead of 6% when buying a resale home of up to €450,000 as their main residence, and 0.4% stamp duty (AJD) on new builds, from 1 January 2027 if the regional budget is passed. As at 20 October 2026, we explain the known requirements, how much you save at different prices, what is still to be confirmed and whether to sign in December or January.
When you buy a resale home in the Comunidad de Madrid, the Impuesto sobre Transmisiones Patrimoniales (ITP, property transfer tax) currently takes 6% of the price: €18,000 on a €300,000 flat. On 5 October 2026 the regional government announced that buyers under 40 will pay 4% when buying their main residence for up to €450,000, from 1 January 2027. As at 20 October 2026 the measure has been announced but not approved: it is part of the 2027 regional budget law. We explain what is known, what is still to be confirmed, how much you save and what happens if you sign in December or in January.
What the Comunidad de Madrid has announced for under-40s
According to the official press release, there are two cuts. On resale homes, ITP would fall from 6% to a reduced rate of 4% if the buyer uses the property as their main residence and the price does not exceed €450,000: a third less tax. On new builds, the Impuesto sobre Actos Jurídicos Documentados (AJD, stamp duty), which is paid on the deed in addition to VAT, would fall from 0.75% to 0.4%. The regional government presents this as putting young buyers on the same footing as large families (familias numerosas), who already pay 4% ITP.
| Tax | Today | Announced | Known conditions | Regional government estimate |
|---|---|---|---|---|
| ITP (resale home) | 6% | 4% | Under 40; main residence of up to €450,000 | About 40,000 beneficiaries a year; average saving of about €2,850; €114 million |
| AJD (new build) | 0.75% (above €180,000) | 0.4% | Under 40; no price cap published | About 4,200 beneficiaries a year; €2.1 million |
Sources: Comunidad de Madrid (press release of 5 October 2026), El Diario de Madrid and Telemadrid (5 October 2026). Beneficiary and savings figures are official estimates; in total, about €116 million a year.
The timetable: from the draft budget to 1 January 2027
According to the official release, the Consejo de Gobierno (the regional cabinet) will approve the draft 2027 budget this October. It then goes to the Asamblea de Madrid, which can amend it, and according to the press final approval is expected at the last plenary session of the year, on 17 and 18 December. As at 20 October we have not found any publication confirming that the draft has already been approved. For reference, the 2026 draft was approved by the Consejo de Gobierno on 29 October 2025, and Law 6/2025 of 23 December was published in the BOCM on the 29th and came into force on 1 January. There are three scenarios:
- Passed on time and unchanged: from 1 January 2027, anyone meeting the requirements would pay 4% ITP or 0.4% AJD on deeds signed from that day.
- Passed with changes: amendments in the Asamblea could change the announced age limit, price cap or deadlines.
- Not passed in time: without a law published before 1 January, the cut could not apply on that day and current rates would remain.
Requirements: what we know and what is still to be confirmed
Little is known so far: you must be under 40 and, for ITP, buy a resale home as your main residence for up to €450,000; for AJD, buy a new-build home. Neither the official release nor the press we consulted mention income limits. The law will need to specify, among other things:
- On what date age is measured, and what happens if only one of the buyers is under 40.
- Whether the €450,000 cap applies to the price or to the tax value, and whether it includes a parking space and storage room, as the current 10% relief does.
- Whether it must be your first home, whether prior residence in the region is required, or a minimum period living in the property.
- Whether the reduced AJD will have a price cap and whether the 4% can be combined with other reliefs.
How ITP works in the Comunidad de Madrid today
Until the law changes, resale homes pay the general rate of 6%. According to the regional government's official page, updated on 23 April 2026, there are three reliefs for a main residence:
- Large families: 4% rate, provided any previous main residence is sold within two years before or after the purchase.
- 10% relief on the tax if the property value does not exceed €250,000, bringing the rate down to 5.4%. It cannot be combined with the large-family 4% rate.
- 100% relief for under-35s in municipalities with fewer than 2,500 inhabitants, for properties worth up to €250,000.
New builds do not pay ITP but VAT, which is a national tax and is not changing, plus AJD on the deed. Today that AJD has three bands depending on value: 0.4% up to €120,000, 0.5% up to €180,000 and 0.75% above that. This is why the announced cut would mainly be felt from €120,000 upwards.
What the tax is based on: the price or the reference value, whichever is higher
Since 2022, the taxable base for ITP on a home purchase has been the valor de referencia (reference value) set by the Catastro (Spain's property register for tax purposes), unless the price in the deed is higher, in which case you pay on the price. This is set out in article 10 of the tax law (Real Decreto Legislativo 1/1993) and by the Comunidad de Madrid. Example: if you buy a flat for €300,000 with a reference value of €320,000, you would pay €19,200 at the current rate and €12,800 at 4%. It is wise to know that value before signing the arras (the reservation contract with a deposit).
Table: how much you save depending on the price
We calculate the ITP on a resale home bought as a main residence by someone under 40 who is not part of a large family, assuming the price is equal to or higher than the reference value and that the 4% cannot be combined with the 10% relief.
| Price | ITP today | ITP at 4% | Saving |
|---|---|---|---|
| €200,000 | €10,800 (5.4%) | €8,000 | €2,800 |
| €300,000 | €18,000 (6%) | €12,000 | €6,000 |
| €450,000 | €27,000 (6%) | €18,000 | €9,000 |
| €460,000 | €27,600 (6%) | €27,600 (above the cap) | €0 |
Our own calculations using current rates (Comunidad de Madrid, 23 April 2026) and the rates announced on 5 October 2026. If the law allowed the 10% relief to be added, the €200,000 home would pay €7,200. Notary, land registry and administrative agency fees are not included.
The saving grows with the price, up to €9,000 on a €450,000 home. But watch the cap: if it applies to the price, as announced, a €460,000 home would pay €9,600 more tax than a €450,000 one. On new builds the saving is smaller: on a property worth €350,000, AJD would fall from €2,625 to €1,400.
Buy in December 2026 or in January 2027?
What decides which rate applies is the devengo, the date on which the obligation to pay the tax arises. The ITP law sets it as follows:
For transfers of assets, the day on which the taxable act or contract takes place.
Real Decreto Legislativo 1/1993, article 49.1.a)
In a normal sale before a notary, that date is the date of the deed. The arras are a reservation, not the purchase itself: signing them in November and the deed in January does not leave you on 2026 rates. Conversely, a deed signed on 30 December pays at current rates. If there were a private sale contract with the keys handed over before the deed, have a lawyer review it. If you are under 40, buying a resale home for up to €450,000 and the date can still be moved:
- Work out both figures, at today's rate and at 4%, to see how much is at stake.
- If signing in January suits you, agree it with the seller and put the deadline for the deed in writing in the arras, with some margin.
- Check the deadlines with your bank: the binding offer (FEIN, the European Standardised Information Sheet) and the valuation are only valid for a limited time.
- Do not postpone a deed date that is already fixed without agreement: missing the arras deadline can cost you the deposit.
How it fits with the Mi Primera Vivienda guarantee
The regional government also runs the Mi Primera Vivienda (My First Home) programme, which guarantees part of the mortgage so that the bank can lend more than the usual 80%, with its own requirements. They are different things: one helps with the deposit and the tax cut lowers the tax. What has been published does not say whether they can be used together; we will have to see the law. We explain the programme in «Gastos de comprar una vivienda en la Comunidad de Madrid en 2026» (Costs of buying a home in the Comunidad de Madrid in 2026).
What it could mean if you are selling in Madrid
ITP is paid by the buyer, but it affects how much they can offer: someone who saves €6,000 on a €300,000 flat has more room for the deposit. If the official estimate holds, about 40,000 buyers under 40 a year would pay less. What nobody can guarantee is how many more sales there will be or how it will affect prices. If you are selling in the coming months:
- The €450,000 cap may weigh in negotiations. According to idealista, in September 2026 listings in the city of Madrid were asking an average of €6,458 per square metre: a 70 m² flat would come to around €452,000, right on the threshold.
- Some buyers may ask you to sign the deed in January. If that suits you, put the date and conditions in writing in the arras.
- Set the price according to what your home is worth, not according to the tax: an announced tax cut is no substitute for a good valuation.
How we do it at Llavely
At Llavely we sell homes in the Comunidad de Madrid with everything included: valuation, photos, video, floor plan and virtual tour, screened buyers (we talk to each one and check their ID before the viewing) and viewings carried out by us, which you follow from your private seller portal. If the buyer needs a mortgage, we put them in touch, at no cost, with a mortgage broker; buying through Llavely is free.
Our specialised lawyers review the nota simple (land registry extract), charges and debts, carry out the calculation of the corresponding taxes, draft the arras and any special clauses when needed, such as a deed date with some margin, review the deed and come with you in person to the notary. Payments are made by ordinary bank transfer or OMF (orden de movimiento de fondos, a bank-to-bank funds transfer), never in cash. You only pay if you sell, on the day of the notary signing: 2.5% + VAT of the price, in total.
We do not know whether the tax cut will be approved as announced, and we do not promise you more buyers because of it. What we can do is help you set a realistic price and organise the sale with clear dates. Ask for your free valuation: we give you a price range straight away, then we call you, see the property and fine-tune the price (we reply in English by email, message or phone).
Frequently asked questions
When does the 4% ITP rate for under-40s in Madrid start?
It is planned from 1 January 2027, but only if the Comunidad de Madrid's 2027 budget law, which includes the measure, is passed. As at 20 October 2026 it is an announcement; according to the press, the Asamblea de Madrid expects final approval on 17 and 18 December.
Who will be able to pay 4% ITP?
According to the announcement, buyers under 40 who purchase a resale home as their main residence for up to €450,000. Details such as when age is measured, or what happens if only one buyer is under 40, will be set by the law.
How much will I save with ITP at 4%?
Two percentage points on the price, or on the reference value if higher: on a €300,000 home you would pay €12,000 instead of €18,000. The regional government estimates an average saving of about €2,850 per buyer.
If I sign the deed in December 2026, can I get the reduced rate?
No, according to the announcement. ITP arises on the day of the sale, which before a notary is the date of the deed, so in December 2026 current rates apply: 6% in general, 4% for large families or 5.4% with the 10% relief.
What if I sign the arras in 2026 and the deed in 2027?
The deed date is what counts, because the arras are a reservation, not the purchase. If you sign the deed in 2027 with the law in force and meet the requirements, you could apply the 4% rate. Do not count on the saving until the law is published.
What happens if the flat costs more than €450,000?
According to the announcement, 6% would be paid on the whole amount: €27,600 on a €460,000 home, compared with €18,000 on a €450,000 one. The law will clarify whether the cap includes a parking space and storage room and whether it applies to the price or the reference value.
Does the cut apply to new-build homes?
New builds pay VAT and AJD, not ITP. What has been announced is that AJD will fall from 0.75% to 0.4% for under-40s; VAT, a national tax, does not change.
Can it be combined with the Mi Primera Vivienda guarantee?
They are different measures: Mi Primera Vivienda helps you get a mortgage of more than 80% and the cut lowers the tax. What has been published so far does not say whether they can be used together.
Sources
- Two new tax cuts to make it easier for young people under 40 to buy a home, saving €116 million (Comunidad de Madrid, press release, 5 October 2026)
- Transmisiones Patrimoniales Onerosas (Property transfer tax) (Comunidad de Madrid, taxpayer information, updated 23 April 2026)
- Actos jurídicos documentados (Stamp duty) (Comunidad de Madrid, taxpayer information, updated 23 April 2026)
- Mi Primera Vivienda (My First Home) (Comunidad de Madrid, updated 8 September 2026)
- Real Decreto Legislativo 1/1993, consolidated text of the Law on Property Transfer Tax and Stamp Duty (BOE, Spain's Official State Gazette, updated 21 March 2026)
- Buying a home will be cheaper for under-40s in Madrid from 2027 (El Diario de Madrid, 5 October 2026)
- Tax cuts for young people under 40 buying a home in Madrid (Telemadrid, 5 October 2026)
- Housing tax cuts in Madrid: ITP at 4% for under-40s (moncloa.com, 6 October 2026)
- The Comunidad de Madrid cuts home-buying taxes for under-40s: ITP at 4% and AJD at 0.4% (que.madrid, 6 October 2026)
- The Consejo de Gobierno approves the draft 2026 regional budget law (Telemadrid, 29 October 2025)
- Law 6/2025 of 23 December on the General Budget of the Comunidad de Madrid for 2026 (BOCM no. 309, 29 December 2025)
- Madrid house prices in September 2026: figures and most expensive neighbourhoods (idealista/news, 2 October 2026)