Tax breaks on buying property in Andalusia extended indefinitely!
- There has never been a better tax time to buy property in Andalucía than now. A unique series of factors have come together to create a buoyant property market.
- Covid has led many people to reconsider their lifestyles, and the universality of the internet has permitted many to work away from their traditional business hub, so the Andalusian Government has stepped in to counter the effects of Covid travel restrictions by making Andalucía one of the lowest taxed areas in Spain.
- These include significant tax cuts on buying property, both off-plan and resale. The two most notable tax changes affecting property purchases are a 20% reduction in Stamp Duty, applicable to off-plan property; and the simplification of Property Transfer Tax into a single flat rate of 7% on buying resale property, which especially benefits high value purchases. These originally temporary reductions have now become permanent. Well, as much as any tax rate is permanent.There are also cuts in Inheritance Tax, IRPF (personal income tax), Wealth tax, and others.
Woman enjoying sunset from a Seville cityscape
- By all these changes, the Regional Government aims to encourage investment into the area, lift the economy, and so improve the life of the people here. The plan is that by lowering taxes, it will increase activity and thus the total tax revenue, which is estimated to increase by an extra 600 million euros a year. This increase in revenue should translate into the Regional Government being able to increase infrastructure investment, offer better services, and reduce public indebtedness.
- In addition, with taxpayers and property buyers ‘losing’ less money in tax, they have more to spend, which increases economic activity. There’s evidence that this is already happening if you look at all the once empty shops being opened up again. And the benefits for property buyers are easy to see, in that you pay significantly less taxes on buying property in Andalucía than elsewhere in Spain! This increase in property demand will lead to the creation of more jobs, which in turn creates income, and attracts even more foreign investment.
- Now, all they have to do is lower payments charged on the self-employed, which will lead to more businesses being created, with the additional spin-off of bringing more of the ‘black’ economy into legitimacy, again increasing the money available for community spending.
This information is a permitted summary extract from an article by Raymundo Larrain Nesbitt of Larraín Nesbitt Abogados, Marbella. www.larrainnesbittabogados.com published in Spanish Property Insight.