Andalucía tax cut 2021

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Tax cut in Andalucía in 2021

The Junta de Andalucía is introducing a significant tax cut for 2021.

New housing tax measures in Andalucía: tax cuts for 2021

Juanma Moreno, president of the Junta de Andalucía, announced on 27 April a cut in regional taxes to ease the economic impact of Covid-19.

The cut comes into force on 28 April and will last until 31 December 2021.

Specifically, the agreed package covers six areas: income tax, Wealth Tax, Inheritance and Gift Tax, Property Transfer and Stamp Duty Tax, the special tax on certain means of transport, and gambling taxes

How does the tax cut affect home purchases?

The new measures adopted by the Junta de Andalucía notably include cuts to property transfer tax, stamp duty, gift and inheritance tax and wealth tax.

The aim of the new measures is to encourage home purchases in 2021 by lowering the costs of buying.

One of the big drawbacks buyers face is the many costs involved in purchasing.

The biggest cost is undoubtedly property transfer tax, which in Andalucía has a general rate of 8% of the purchase price.

For example, on a €200,000 purchase, the buyer would have to pay €16,000 in property transfer tax.

Property Transfer Tax:

The decree-law cutting the general rate of Property Transfer Tax reduces the general rate applicable to the transfer of property and the creation and assignment of property rights over it, except security rights, from the current rates of 8%, 9% and 10% to a single general rate of 7%.

This makes buying a resale home cheaper, as the biggest cost is reduced.

Using the example above, instead of paying €16,000 in ITP, the buyer would pay €14,000, a real saving of €2,000.

Stamp Duty (AJD):

Another key measure is the cut in stamp duty.

The new general rate falls from 1.5% to 1.2%.

This tax is paid on the dissolution of joint ownership, subdivision, change of use and on other occasions.

This measure also encourages the sale of new-build homes.

According to the Junta de Andalucía's calculations, these two measures will benefit more than 275,000 people.

Reduced rates of property transfer tax and stamp duty: Andalucía tax cut

For Property Transfer and Stamp Duty Tax the reduced rates are loweredfor buying a main residence with a real value of no more than 150,000 euros. The first falls from 7% to 6% and the second from 1.2% to 1%.

En el Property Transfer Tax the reduced rate of 3.5% is kept for under-35s, large families and people with disabilities, raising the maximum home value from 130,000 to 150,000 euros for young people and from 180,000 to 250,000 euros for the other groups. The reduced rate is extended to victims of gender-based violence and terrorism and to municipalities with depopulation problems.

The rate of stamp duty remains reduced for people with disabilities and large families, and the 0.3% rate is extended to the groups in the previous section. The measure as a whole would affect around 19,700 taxpayers.

How long do the new measures last?

The cut comes into force on 28 April and will last until 31 December 2021.

What does the Junta de Andalucía expect from this tax cut in 2021?

These tax measures aim to help reactivate the economy by cutting direct and indirect taxes in Andalucía.

The Covid-19 health crisis became an economic crisis nationally and worldwide, and Andalucía was one of the hardest-hit regions as its economy depends directly on tourism and hospitality, undoubtedly the two most affected sectors.

Although home sales and prices haven't suffered particularly during this period, despite voices predicting a fall similar to the 2008 crisis, these measures will also encourage home purchases in Andalucía.

In addition, everyone buying a home will benefit from these cuts, whatever their purchasing power or the value of the home, as the cut affects everyone equally.

In this way, Juanma Moreno's government aims to increase revenue despite the cuts by increasing the number of transactions between now and the end of 2021.

How can I benefit from the new tax measures?

When paying tax on a property purchase, you'll need to state the rate you're applying.

If it's a reduced rate because you're under 35, a large family or a person with a disability, you'll need to provide documentary evidence of why the reduction applies.

Processing property transfer tax and stamp duty in Málaga

If you buy a property with bank financing, the bank's gestoría will process and pay the taxes, after you pay in the funds.

But if you've bought a property in Andalucía without financing or any bank involvement, you're responsible for paying the tax on time and correctly.

At Valoracasa Estate Agents we offer our buying clients a paperwork service that fills in and processes the regional tax forms free of charge.

We'll also process the change of ownership at the Land Registry for your peace of mind.

 

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