Many real estate experts expected that 2021 would be another one of the worst years for the Spanish real estate market because of the pandemic’s devastating financial consequences. In order to save the real estate industry and fuel the sales of apartments in Spain, the Andalusian authorities decided to introduce extra measures and approved an impressive tax relief package which applies for both off-plan and resale properties.
Tax relief package
The tax relief package includes the cuts of the following property taxes:
- ITP (property transfer tax)
- AJD (stamp duty)
Until April 2021, the property transfer tax ranged from 8% to 10% depending on the property price. Since April 28, this figure is 7% regardless of the sale value of the property. In other words, if you are interested in buying a property to get a Golden Visa, you need to invest in a housing unit that costs at least € 500,000. In this case, you would have to pay € 41,000 of the property transfer tax before the new law, whereas now the tax payment is € 35,000, which is over 15% of tax savings.
High-end property and more savings
In addition, property buyers should take into account that the tax savings grow significantly when buying pricier real estate. The higher the property price, the more money you will be able to save on the tax. For instance, if you buy a luxurious beachfront villa that costs € 1.5 million, you will save around 25% while for a property worth € 3 million this figure reaches 27%. This is a great reason for those who are looking for a high-end property in Spain to consider buying now.
As for stamp duty, it was cut from 1.5% to 1.2%, which allows to save up to 20% tax payments. However, you should keep in mind that stamp duty applies only to off-plan housing.
Growing property sales
As a result, the lowered taxation has attracted foreign investments and pushed property sales significantly. In fact, according to Spain’s National Bureau of Statistics, this year’s June has become the best performing in real estate history with over 48,000 properties sold. In addition to tax cuts, the reasons for the record sales include extremely low interest rates as well as huge liquidity and low performance of bonds and other financial assets.
Taking into account all the above information, we recommend that you start looking for your ideal property in Spain today, as the tax cut lasts till December 31, 2021.
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