Marbella’s high-end market is booming!

Luxury property for sale in Marbella
Luxury property for sale in Marbella

The new tax changes put in motion by Andalusia’s regional government back in 2019 on inheritance tax greatly contributed to attract foreign investments as they translated in practice into abolishing inheritance tax in Andalusia, as we reported at the time. This was a new tax milestone that ushered in a new tax planning era in Andalusia.

However, the tax changes on IHT, important as they were, are dwarfed by the new tax changes we reported back in April 2021 on idealista, which significantly lowered both Property Transfer Tax (resales) and Stamp Duty (off-plan property) in Andalusia.

The new tax policy of greatly reducing taxes on buying & selling property in Andalusia has created a mini property boom, specifically in the high-end market. One of the main reasons behind this property frenzy is because - as we explained back in April - buyer’s tax-savings grow exponentially in line with the sale price. In plain English, the higher the sale price, the more a buyer stands to save in tax.

With an example, on a €500,000 resale a buyer saves 15% in tax. Yet on a €3,000,000 property you save 27%! This amendment in tax laws is nothing short of a game-changer fostering foreign investments on a large scale.

In fact, so much so, that multiple villas at exclusive gated resorts in Marbella, such as Sierra Blanca and La Zagaleta, have sold well this year with price tags over 20mn euros, as we’ve pointed out repeatedly. This in turn has trickled down the market fostering sales of villas within the million range.

COVID-19 has also made left its mark, as it has changed buyer’s consumer habits, specifically HNWI and UHNWI, as they now seek ample spaces, secluded gardens, and large open terraces. This translates into luxury rural properties and large villas, with plenty of living space, being highly sought-after. Moreover, discerning buyers shy away from large, crowded cities and actively look for virus-free safe havens. Marbella is viewed as one given its abundant villas with lush mature gardens and large open spaces.

These two factors working in tandem (greatly reducing property taxes and the new covid-induced consumer habits) has created the base of this upsurge in the sale market in 2021. It goes on to explain why Marbella’s luxury market is currently outperforming and spearheading the real estate market recovery. It’s booming y’all!

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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