Spanish property experts agree that we live in interesting times. As well as the remarkably quick recovery in purchases, sales and new constructions we are now seeing changes in taxation both regionally and locally which are likely to generate yet more activity in the coming months.
Our Conveyancing Partners, Jon Sutton and Gisele van Meer are seeing a rush of buyers wanting to take advantage of the tax reductions which were granted during the worst of the pandemic. In Andalucia the principal property tax transmission tax – ITP – on resales was reduced to a flat rate of 7%. We are very pleased to say that the Andalucian regional government has decided that the 7% flat rate should continue from January 2022.
This, together with the favourable inheritance tax rates for families in Andalucia, makes this area of Spain a good place to buy re sale property.
In other regions of Spain the tax on purchasing property does vary. For example at present Murcia has a flat rate of 10% and some areas such as Majorca have varying rates depending on value. For new constructions you pay Iva at 10% at current levels. It is 21% for commercial property and plots of land.
It is worth noting that in the Canary Islands IGIC – the equivalent of Iva – is charged at only 7%. Vera Liprandi, partner at our Tenerife Office, is dealing with resales as well as purchases of newly constructed properties and can advise on all tax levels and obligations for buyers and sellers. There are also some very good tax incentives so it is worth enquiring about your individual case.
One clear effect of the pandemic throughout Europe has been the number of people deciding to work remotely and moving to Spain and its islands. For many of these people the decent infrastructure and weather will continue to draw them to Spain regardless of increases in prices and taxes. Equally the relative costs of living and less populated areas inland, together with the busy rental market, are attractive, particularly to northern Europeans.
The Spanish property market is now strongly regulated and property rights are protected by Land Registration and the Notarial system. Although a Deed is signed before a Notary it is still very important to have an independent conveyancing lawyer to check all aspects of a purchase including land registration, licensing, taxation aspects and contracts.
For more information contact Jon Sutton on +34 951 315 161 or email [email protected]
For our Tenerife office contact our Tenerife partner Vera Liprandi on +34 922 719 520 or email on [email protected]