The lower tax burden encourages real estate investment.
Andalusia is, along with Madrid, the most fiscally attractive Autonomous Community for Real Estate Investors.
The following is a very schematic list of the tax improvements implemented by the Government of the Junta de Andalucía over the last three years, which are undoubtedly contributing to attracting unprecedented levels of investment in Andalusia.
1. Reduction of the Tax on Transfer Tax and Stamp Duty (ITP, AJD).
By means of Decree-Law 7/2021, of 27 April, and with the aim of boosting and reactivating the economy of the Autonomous Community of Andalusia after the Covid-19 pandemic, the rates of taxation on Transfer Tax and Stamp Duty (ITP, AJD) in the real estate sector were temporarily reduced (from 28 April to 31 December 2021):
- Modality of onerous capital transfers: the rate applicable to transactions involving the transfer of real estate and the constitution and transfer of rights in rem over real estate (except guarantee rights) is reduced to 7% (previously 8%, 9% and 10%, depending on the case).
- Modality of documented legal acts: The general tax rate for notarial deeds is reduced to 1.2% (previously 1.5%).
Although the measures were intended to be temporary, both reductions remain in force 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 the Wealth Tax (100% rebate on the resulting tax payable).
This measure will take effect from 2023, and the approximately 200,000 Andalusian taxpayers affected will not have to pay anything in this tax. Andalusia becomes the second region in Spain to completely abolish this tax, following 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 and will encourage many national and foreign families to buy a property and settle permanently in Andalusia, especially in the luxury housing segment.
3. Practical abolition of Inheritance and Donations Tax.
Since 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 is established for the spouse and direct relatives of up to €1,000,000, applicable to kinship groups I and II:
- Group I:
- Descendants or adopted, under the age of 21. Equated to adopted, those subject to permanent family foster care and guardianship for the purpose of adoption.
- Group II:
- Descendants or adoptees, 21 years or older. Those in permanent family foster care and foster care for the purpose of adoption are treated in the same way as adoptees.
- Spouse or unmarried partner registered in the Registry of Unmarried Partners of Andalusia.
- Ascendants (parents, grandparents and other ascendants).
- Adoptive parents. Individuals who carry out permanent foster care and guardianship for the purpose of adoption are considered to be adoptive parents.
3.2 Acquisitions by inheritance or donation
A deduction of 99% of the tax liability applies to acquisitions by inheritance or donation to the above mentioned kinship 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 and financial circumstances 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 Samsara Wealth 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.
