Andalusia lowers taxes, including Property Transfer Tax and Stamp Duty

Andalusia lowers taxes, including Property Transfer Tax and Stamp Duty, in dashing move to boost the property market.

Tax reductions in Andalusia
Tax reductions in Andalusia / Pixabay

On Monday 26th of April, Andalusia’s coalition government agreed to lower taxes in the region of Andalusia. Concretely, the following six taxes will be significantly reduced:

  • IRPF (personal income tax)
  • IHT (inheritance tax)
  • Patrimonio (wealth tax)
  • ITP (property transfer tax)
  • AJD (stamp duty)
  • Taxes on gambling

Frankly, I’m not quite sure how they plan to reduce IHT furthermore, as over the last three years none of our clients have paid anything on inheriting an estate in Andalusia since the drastic changes in IHT of April 2019, but it’s welcome news of course.

For anyone who’s been following my articles over the years, they’ll know I am a staunch defender of lowering taxation across the board as I strongly believe it greatly attracts foreign investments, thus creating jobs and wealth on its wake.

Raising taxes is a futile exercise (even counterproductive), as you only chase away taxpayers, which leads to job losses and eventually a generalized impoverishment of society at large. Ironically, Andalusia has never made more money in taxes since it lowered them in 2019! In Economic theory, we know this as the Laffer curve.

Andalusia slashes Property Transfer Tax (PTT)

The Andalusian parliament enacted a new law, which has been published in Andalusia’s Official Law Gazette (BOJA), which slashes PTT for 2021. This is a temporary measure devised to offset the negative repercussions of Covid-19 in the property market and help to foster and kickstart property transactions. It will only last until the end of this year. So, anyone whose thinking of buying resale property in Andalusia, better get moving.

Until now, Andalusia followed a sliding scale for ITP that started at 8% and went to 10% contingent on the sale value. This has now been struck off, and a unique tax rate of only 7% applies regardless of the sale value.

This change will be in force as from the 28th of April 2021 until the 31st of December 2021.

Before:

Residential property sale price

Tax rate

Up to 400,000€

8%

400,001€ – 700,000€

9%

701,000€ up

10%

Now:

Residential property sale price

Tax rate

Any

7%

This tax change translates into a massive tax saving for property buyers in Andalusia.

Examples:

1.      On a €500,000 sale price, the tax saving is 15%.

2.      On a €3,000,000 sale price, the tax saving is 27%.

What’s important to note, is that this tax-saving grows exponentially in line with the sale price; the higher the sale price, the larger the % saved in taxes.

Andalusia reduces Stamp Duty  

They have also approved to slash Stamp Duty from 1.5% down to 1.2%

Whilst Stamp Duty doesn’t impact on resale property, it does affect off-plan. Anyone buying new-build property will now make a considerable tax saving with this new tax change. That’s a 20% tax saving on new builds!

 

At LNA we can assist you buying, selling or renting out your property in Spain. We have 18 years’ experience in conveyance & tax. We are also specialized in immigration & residency visas.

Larraín Nesbitt Abogados, small on fees, big on service.

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