Tax Update

The Andalusian government reduces the transmission tax to 7%

Good news for property buyers on the Costa Del Sol.

Due to the coronavirus (COVID19) pandemic, to help promote and reinvigorate the Spanish real estate market in Andalucía, it was announced in Decree-law 7/2021, of 27 April 2021, that a rate reduction of between 1% to 3% of the transfer tax (Impuesto sobre Transmisiones Patrimoniales, commonly abbreviated to “ITP”) would be applied to all resale property purchases in Andalucía. This reduction is effective immediately and will continue through until the end of 2021.

So far, Andalusia pursued a sliding scale for the ITP, which began 8% and dependent on the sales value up to 10%. This has now been deleted, and regardless of the sales value, a flat-rate tax rate of only 7% applies.

This tax change leads to a massive tax savings for real estate buyers in Andalusia.

Before:

  • 8% ITP on the first €400,000
  • 9% ITP between €400,000 and €700,000
  • 10% ITP from €700,000 and upwards.

These rates have now been reduced to a single fixed rate of 7%.

Examples of what buyers will save depending on the purchase price:

  • On a property purchased for €250,000, a saving of €2,500
  • On a property purchased for €500,000, a saving of €6,000
  • On a property purchased for €750,000, a saving of €11,500
  • On a property purchased for €1,000,000, a saving of €19,000
  • On a property purchased for €3,000,000, a saving of €79,000

It is important to note that this tax savings, are growing exponentially depending on the selling price. The higher the selling price, the greater the percentage tax savings. 

New and Off Plan Properties:

With new and off plan properties in Andalucía there is a reduction in the document tax only. This reduction is from its current 1.5% down to 1.2% and will continue until the end of 2021. Whilst such properties remain subject to a 10% IVA (VAT) payment, there are many reasons as to why they remain an attractive option to buyers. With new promotions being released regularly and construction on existing developments continuing at a great speed, buyers have a fantastic selection to choose from along the entire Costa del Sol, with many developers offering excellent buying incentives to entice international buyers to secure their dream new home in the sun.

Now is the time to purchase your dream property on the Costa Del Sol and to benefit from the tax reduction.

Maiti Homes is happy to help you find your dream property. Due to our experience and location knowledge, we can find the perfect property for you. 

We assist you at any step during your property purchase. 

We work closely together with several law firms, construction companies, architects, banks, tax advisors and interior designers.

Contact us for a non-binding conversation.

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