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IVA Reduction

IVA Reduction

Spanish Government reduces tax on new properties to 4%

19 Aug 2011

Note: This IVA reduction has been extended in to 2012

New Spanish property for sale with only 4% tax

Today, the Spanish Government’s Development Minister, José Blanco has reduced the tax (IVA) on all new properties from 8% to 4% effective immediately. This temporary reduction will run until the end of 2011 and will stimulate sales on new property and boost the Spanish economy.

With the ongoing financial crisis hitting Spain hard, the Government has taken a leap to boost the sales of new homes throughout the country. The real estate sector has been struggling in Spain since its peak in 2007 and the banks’ exposure to loans have forced many to offer properties at huge discounts with 100% mortgages.

Potential buyers were only asked to cover the taxes and costs which amounted to a total of around 12%. Now with the IVA (equivalent of VAT in the UK) slashed in half, this will come as a huge bonus to potential property purchasers.

The Spanish Government has made this move to further protect the banks and ‘cajas’ who have come up against liquidity issues and an over-stocked portfolio of repossessed real estate which remained unsold from when constructors and developers went out of business. 

The last 4 months of the year will be a crucial time and should encourage an influx of buyers looking for already heavily-reduced properties now with tax breaks.