Spain's ambitious tax measures to tackle housing crisis

The Spanish government has unveiled a draft bill aimed at curbing speculation in the housing market through a series of fiscal measures, notably introducing a 'supertax' targeting non-EU non-resident property buyers. This legislation seeks to address the pressing challenges of rising rental costs and the scarcity of affordable housing in Spain.

The draft, registered at the Spanish Congress, focuses on limiting the number of short-term tourist apartments, which many critics blame for escalating rental prices. The government intends to ensure the availability of public housing stock while incentivizing lower rental prices. A significant aspect of this proposal is the effort to restrict home purchases by non-resident third-country nationals.

To achieve these goals, the Spanish government plans to revise tax regulations, effectively doubling the costs for non-EU, non-resident individuals seeking to buy property in Spain. According to the legal text of the "Complementary State Tax on the Transfer of Real Estate to Non-EU Residents," this tax will be applied at a staggering 100% rate on the property's taxable value.

International media have spotlighted the implications of this 100% tax, but the bill encompasses a broader range of policies and tax reforms aimed at stabilizing the property market.

Tourist flat tax hike

Among the proposed measures is an increase in VAT on holiday apartments to 21%, aligning them with other economic activities. This adjustment aims to dissuade landlords from favoring tourist rentals over long-term leases, as they currently have the advantage of higher returns from short-term rentals.

Presently, landlords offering Airbnb-style properties without typical hotel services, such as cleaning or meals, are exempt from VAT. By imposing this tax, the government hopes to level the playing field for local renters.

Extension to IRPF rebates in 'non-stressed' areas

The bill also includes an extension of net rental yield rebates for IRPF, which may reach up to 100% in areas not classified as 'stressed' rental markets. This deduction will benefit property owners who lease their homes below the reference price set by Spain's national rental index.

Property investment companies taxed more

Another significant proposal is the tightening of taxation on listed real estate investment companies, known as SOCIMIs. The tax rate will increase from 15% to 25%, with an exception for homes designated for affordable rental.

Updating capital gains tax

In addition, the proposed law aims to revise the rates and quotas for the Increase in Urban Land Value tax (plusvalía), prompted by a recent ruling from the constitutional court. Specific details on this adjustment remain unclear.

Penalizing empty properties

Lastly, the draft bill includes measures to penalize landlords who maintain empty properties, particularly those with extensive real estate portfolios. The government argues that this strategy will encourage landlords to rent to local residents, as taxes on vacant properties will see an increase. Current rates range from 1.1% to 2%, and the legislation aims to introduce more progressive tax brackets, which will be updated in conjunction with the Ministry of Finance.