Words: Ashley Rigg
Published: 22nd August 2011
Agents cool on Spanish property tax cut
Overseas agents based in Spain have given a cool reception to the governments plan to cut the sales tax on new homes.
The Spanish government announced on Friday that the tax would be cut from 8% to 4% until the end of 2011 in what an official called an “exceptional and temporary measure”.
However, although some agents have welcomed the cut as a “nice gesture”, nobody we spoke to believed the action will make a significant difference to the state of the Spanish property market.
Chris Murphy, director of Mercers, an agency in Murcia, believes the cut is too small and affects such a small proportion of total sales to make any impact.
“It won’t make any difference what so ever. I can’t remember the last time I sold a new build property, the bulk of the market is resales. Even if it did apply to resale property, 4% is probably too small to make much difference anyway.
“The main way the government can help the market is by issuing first occupation licences to those homes that have not got them to help restore confidence.”
Ken Spencer, director of Property Options, an agency in Marbella, goes further.
“It’s a gesture but the it [the government] has not addressed the two biggest issues facing the market, namely first occupation licences and the fact that new build property prices are still too high.
“In Marbella new build property in at least 10% higher than identical properties on the market privately. A 4% tax reduction won’t go anyway to shift property that is not priced correctly.
“A better measure for the government to take would have been to force the banks to disclose their toxic assets. Many new build properties are worth less than the developer mortgages and developers are unwilling to declare their losses. The tax cut does nothing to address the root cause of the problem”.
Source: Global edge
User Comments
Move the property market in Spain. Simple defer payment of IVA / Transmission Tax for 5 years or upon the sale of property if before. Then immediate costs of purchase would only be around 2% hence affordable!...not rocket science really is it?
G Peters ,
The Property Shop
Anything that helps get costs down must be good BUT - what about the Transfer Tax on second hand property? A similar move would also help in moving the large supply available in this area. Prices have tumbled I know but all buyers want to squeeze the last drop from a deal and another 3.5% to work with (in Valencian area anyway) would not go amiss.
Roy Hayes,
Kasas Royale