NewsProperty sellers across Spain face possible tax hikes

December 18, 2014

President Rajoy has been criticised for planning to increase taxes on the sale of second hand homes

By Carol Tallon

Originally published in the Costa Almeria News

Increased taxes for Spanish sellers?

Increased taxes for Spanish sellers?


President Rajoy has encountered resistance from within the Senate to his party’s proposal to increase the level of taxes paid on the sale of second-hand properties. Despite approval by the governing party, more than 50 per cent of the opposition parties are against the changes and will present amendments to the proposal, which seeks to eliminate accounting measures that curb the effects of inflation. The removal of these measures will effectively increase taxes due for most properties being sold but will have a greater impact on properties purchased more than 20 years ago.

The majority of opposition has petitioned le Congreso de los Diputados not to raise taxes of the sale of all second-hand property. This arm of fiscal reform has already had a longer journey through the Senate and just last week, the timeframe that critics of the scheme have to bring amendments or vetoes was further extended until 13th December, by which time it is expected to receive approval. If approval is obtained in its current form, without successful amendment, sellers from early next year will find their tax liabilities upon sale, generally calculated by their local council, significantly increased. The level of increase will depend upon when the property was purchased and how many years it has been occupied as the primary residence. Two exceptions to this will be for sellers over 65 years of age and sellers who use the sale proceeds to buy another home but not an investment property.

Opposers to this reform have referred to the proposed legislation as a ‘fiscal hatchet’, however, their petition to call a halt to it has been rejected by the main party. The extended time to bring amendments has been welcomed but the changes are viewed as unwelcome but inevitable. The next issue will be one of timing. Interestingly, the majority of industry experts are in agreement with the opposition parties and feel that this change is the wrong solution at the wrong time. The Spanish property market is finally starting to see signs of recovery, with the volume of second-hand houses being sold is up 22.6 percent year on this time last year, however, these sales are at lower values and this is shows that sellers are already losing out. At this stage of recovery, the sales market is simply too vulnerable to cope with increases in taxes or charges. A decision on this issue is expected on 13th December 2014.

Carol Tallon