Property tax increases in Andalucia
With the ongoing financial crisis still affecting the Spanish economy, several autonomous communities are trying to combat the lack of funds by raising several taxes. It appears that Andalusian community has raised several taxes including those on property purchases.
The two main Spanish property taxes that have seen increases are, transfer tax (ITP) which is applicable on the purchase of existing homes and stamp duty (IAJD). Both these increases have been in force as of the beginning of 2012. Although these increases do not seem to have been reported widely in the press.
Supposedly these increases have been implemented to ‘help stimulate employment and growth’ and to ‘increase government revenue through a more progressive tax system’.
Prior to 2012 if you were purchasing an existing home (resale property) you had to pay a 7% tax on the sales price up to 400.000€. And 8% on any amount above the 400.000€.
As of the 1st of January 2012, the tax on the sale of properties up to 400.000€ has risen to 8%, on the amount above 400.000€ you have to now pay 9%. And if you are buying for over 700.000€ then the tax on that amount rises to 10%.
The property transfer tax was originally raised from 7% to 8% for purchases over 400.000 when the Spanish government raised VAT (IVA) on new properties to 8%. At the time the Andalusian government used the rationale of not discriminating against any particular group. However when the tax burden on new purchases was reduced by the central government to 4% for a short period to stimulate (or at least bring forward) the sales of new homes, this ‘discount’ was not seen on the sales of existing homes. Now with the new government in power in Madrid, this tax reduction is set to continue for 2012. Yet taxes on resales have not decreased, but have in fact increased. For a local government that claims it does not want to discriminate against any particular group, the Socialist lead Autonomous Community of Andalucía new rules seem to benefit those buying from developers and penalising those buying from individuals.
Andalucía is still trying to promote younger people to get onto the property ladder by allowing them to purchase properties up to 130.000€ and pay only 3.5% transfer tax as long as it will be their primary residence.
Prior to 2012, if you were buying a new property you would pay additional to the VAT 1% stamp duty. In the case of a resale property, you had to pay it in the case that you were taking a mortgage. Again as of 2012 this tax has increased by 20%. So it now stands at 1.2%. Although it will not affect all those buying resales properties, it will affect the many looking at financing. Unless of course you are under 35 and buying the property for less than 130.000€ and intend to use it as you main residence. Then it stands at 0.3%.