COVID-19: Housing maintains a high tax rate

The Government proposes to reduce VAT by 4% for the purchase of a first home

Despite the fact that the health crisis caused by COVID-19 has paralyzed the Spanish economy, the residential sector continues to maintain high taxation. Consequently, taxes can account for 25% of the final price of the house.

In this situation, the Government is studying the possibility of reducing VAT by 4% for the purchase of the first home. However, this tax is not the only one that maintains the high inspection rate in residences. In the first place, the purchase of land must be taken into account, since this tax usually has an impact of 20% or 50%.

On the other hand, the high residential rate goes back to the time when the municipalities were financed for the most part by urban planning. In this way, the large real estate companies believe that it would not be difficult to reduce said taxation and would not have a great impact on the municipalities. Therefore, a reduction in this tax would mean greater access to housing by the middle class.

Another of the residential taxes would be construction costs, which represent 45% of the final price. This increase in construction costs is a structural problem and a reconversion of them could affect GDP and tourism.

 B Law & Tax
International Tax & Legal Advisors

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Tags: spanish tax advisor, Taxes, Coronavirus, VAT, Housing, Residences, Construction costs, Floors, spanish tax lawyer