The deepening financial crisis in Spain and the emerging fears of a renewed downturn in the months following summer, the annual economic shot in the arm of most Southern European countries, the Spanish Government has decided that in addition to the painful austerity measures and cuts in spending, economic recovery will only come if Spain can attract continued inward investment. In a bid to address the lack of activity in the property market and, in particular, the glut of new build properties currently sitting vacant in various stages of completeness, the Government has approved a tax relief measure designed to encourage the purchase of such new-build, or off-plan properties.
To date, purchasers acquiring newly built homes were deemed to be purchasing directly from the developer and the IVA (Spanish VAT) payable on transactions of that nature was set at 8%, calculated by reference to the purchase price of the property. As from the 18th August 2011, the Government has lowered that rate of tax by 50 % to just 4%!
There are no other conditions to be satisfied in order for the discounted rate of 4% to apply to the property transaction other than the property itself being a new-build or, indeed, off-plan. The discounted rate is being applied only to transactions conducted before 31st December 2011, i.e., for approximately the next four months. What this means, therefore, is that a purchaser planning to purchase a property for €150,000.00 would save a significant €6,000 on the transaction.
This, coupled with low new-build property prices means that, if you’re in the market, you can now make an additional saving. Our Spanish lawyers will be happy to assist by advising you and managing the purchase of your property from the payment of your deposit to picking up the keys to your new home.
Find out more about our tax services here.