Is it legal for a private individual to sell to a third party (the final buyer) a dwelling under construction in exchange for a price paid as an assignment or “pass-on” fee? What taxes does this involve?
Yes, it is legal.
The onerous transfer of the rights arising from a contract for the sale and purchase of a dwelling under construction by a private individual to a third party, who will ultimately appear as the purchaser in the public deed of sale, is subject to Transfer Tax (Impuesto sobre Transmisiones Patrimoniales Onerosas – ITP), as a transfer of rights.
Royal Legislative Decree 1/1993, of 24 September, approving the Consolidated Text of the Law on Transfer Tax and Stamp Duty (ITPAJD): Articles 7.1 and 7.5.
The first delivery of the dwelling will be made by the developer once construction has been completed, that is, when the property is placed at the disposal of the purchaser appearing in the public deed of sale. This delivery is subject to VAT and not exempt.
Law 37/1992, of 28 December, on Value Added Tax (VAT): Articles 4, 5, 11, 20(One)(22º) and 75.
