Andalusian Government reduces the Transfer Tax for resale properties

Transfer Tax reduced to 7% in Andalucía

Updated 26 October 2021

Extended indefinitely. Source: BOJA 26 October 2021. See Pages 29 & 31

If you were thinking about investing in a property on the Costa del Sol, we have some good news! 

The Andalusian government has approved a decree that includes a reduction in the Transfer Tax (the tax paid on the purchase and sale of second-hand homes, for example), at present the three rates currently set at 8%, 9% and 10% will now be replaced by a flat rate of 7%. In addition, there will also be a small reduction in Stamp Duty Tax from 1.5% to 1.2%. The costs associated with paying these taxes on the purchase of a second-hand property will be significantly reduced. This new reduction will be available now only until 31st December 2021 extended indefinitely and only in Andalucía.

Yes, as it sounds, now is a good moment to buy a property on the Costa del Sol.

The costs associated with paying these taxes on the purchase of a second-hand property will be significantly reduced.

To find out more about what this new law entails and the savings it can mean for a buyer of a second-hand property, we interviewed Felipe Martínez, of the prestigious Martínez-Echevarría & Rivera, international law firm, established in 1983 on the Costa del Sol, with a team of 230 people distributed over 20 offices and in 4 countries.

You can watch the full interview in our youtube channel (don't forget to subscribe) or read it below:

We interviewed Felipe Martínez

Can you explain to us the taxes on buying a resale property in Andalucia until now?

At present, when buying a resale property in the Andalucía area you pay a Transfer Tax at the rate of 8%, 9% and 10%, depending on the purchase price. 

If the property purchase price is:

• Up to €400,000 you pay a Transfer Tax rate of 8%
• From €400,000 to €700,000 you pay a Transfer Tax rate of 9%
• From €700,000 onwards you pay a Transfer Tax rate of 10%

What are the tax changes applied by the new Law if you buy a resale property?

Due to the pandemic Covid-19, the Junta de Andalucia has approved  a new rate for the Transfer Tax until the end of 2021 extended indefinitely. This new rate is a flat rate of just 7% independently of the purchase price.

Does the new tax Law change also if you buy a brand new home / development?

Also the law has changed if you decided to buy a new brand home.

Which other tax changes have been applied?

On brand new properties, VAT remains the same (10%) however the Stamp Duty Tax has been reduced from 1.5% to a 1.2%.

Can you give us an example of the tax benefit for a resale property of 1.500.000€?

As an example for the purchase of a property of €1,500,000 on a resale by one person, the purchasers should have paid the amount of Transfer Tax equivalent to €139,000, however now with the new law, and the flat rate of 7% the tax to be paid is €105,000 with a considerable save of €34,000.

Why do you think the Andalusian Government has changed the taxes for resale properties?

This new law is to try to obtain 2 main objectives:

1. Reactivate the Real Estate sector, although the Costa del Sol has has not been badly affected, it has been in the region of Andalucia.
2. Give to the citizens a higher economical capacity to expend, in order to enable at the same time the Tax Office to recuperate the taxes in an indirect way.

Where can I get more information in case I want to buy a resale property on the Costa del Sol?

Martínez-Echevarría & Rivera will be pleased to assist you with any questions you may have about this new law or any further legal questions, contact us at:

• Our website: martinezechevarria.com
• Telephone: +34 952 765 000
• E-mail: [email protected]

Sources:

1. El Mundo:
   El Gobierno andaluz rebaja el impuesto de transmisiones al 7% 
2. El País: El gobierno Andaluz acomete...
3. BOJA 26th October 2021: BOJA 26th October