Tax & Legal

Attractive taxation for real estate investment on the Costa del Sol.

Wednesday April 19th, 2023
Tax incentives Andalusía

The lower tax burden encourages real estate investments.

Alfonso Martínez, Managing Partner, Surinvest.

Andalusia is, together with Madrid, the most fiscally attractive autonomous community for real estate investors.

Below, and in a very schematic way, we list the tax improvements implemented by the Government of the Junta de Andalucía during the last three years, which are undoubtedly contributing to attract unprecedented levels of investment in Andalusia.

1. Reduction of the Tax on Property Transfer and Documented Legal Acts (ITP, AJD).

By means of Decree-Law 7/2021, of April 27, and with the aim of boosting and reactivating the economy of the Autonomous Community of Andalusia after the Covid-19 pandemic, the tax rates of the Transfer Tax and Stamp Duty (ITP, AJD) in the real estate sector were temporarily reduced (from April 28 to December 31, 2021):

  • Modality of onerous capital transfers: the rate applicable in transactions involving the transfer of real estate and the constitution and assignment of real rights over real estate (except for those of guarantee) is reduced to 7% (previously 8%, 9% and 10%, as the case may be).
  • Documented legal acts: The general tax rate for notarial documents is reduced to 1.2% (previously 1.5%).

 

Although the measures were temporary in nature, both reductions remain in effect for the years 2022 and 2023.

2. Elimination of Wealth Tax.

On 20 September 2022, the Governing Council of the Andalusian Regional Government completely abolished (100% rebate on the resulting tax payable) the Wealth Tax. 

This measure will take effect from 2023, and the approximately 200,000 Andalusian taxpayers affected will not have to pay any of this tax. Andalusia will thus be the second region in Spain to completely abolish this tax, after Madrid.

Until now, the minimum amount exempt from Wealth Tax in Andalusia was €700,000 and the tax base included movable and immovable assets, except for the main residence up to €300,000.

The abolition of this tax has encouraged and will encourage many national and foreign families to buy a property and settle permanently in Andalusia, especially in the luxury housing segment.

3. Inheritance and gift tax abolition in practice.

As of 11 April 2019, Andalusia is one of the Autonomous Communities in which inheritance and gift tax has been practically abolished for the closest relatives.

3.1 In Acquisitions mortis causa or by inheritance.

A minimum exemption for the spouse and direct relatives of up to €1,000,000 is established, applicable to relationship groups I and II:

  • Group I:
    • Descendants or adopted children under 21 years of age, persons in permanent foster care and foster care for the purpose of adoption shall be considered as adopted persons.
  • Group II:
    • Descendants or adopted children, aged 21 and over, and persons in permanent foster care and foster care for the purpose of adoption.
    • Spouse or unmarried partner registered in the Registry of Unmarried Partnerships of Andalusia.
    • Ascendants (parents, grandparents and other ascendants).
    • Adopters. Persons in permanent foster care and guardianship for the purpose of adoption are treated as adopters.

 

3.2 In Acquisitions by inheritance or donation.

A 99% tax credit is applied to acquisitions by inheritance or donation to the aforementioned relationship groups I and II.

 

 

*Legal Note.  The legal, tax and financial legislation and regulations applicable to real estate investment are subject to frequent changes, and their scope and impact vary according to the personal circumstances and assets of each investor, and the characteristics of each type of transaction. This document does not constitute an investment recommendation on any asset, nor does it have any contractual effect. Contact Surinvest for a global and detailed analysis of your real estate investment project, adapted to your asset profile and the type of transaction in each case.