Words: Ashley Rigg
Published: 15th October 2009
Spain: Tax relief abolition to add 22,000 Euros to purchase costs
The Spanish government has announced its intention to abolish mortgage tax relief beginning in 2011 which experts warn could add another €22,000 to the cost of buying property.
Mortgage tax relief makes mortgage repayments tax deductible, reducing tax bills and leaving more money in the pockets of home owners. Currently, borrowers can deduct 15% of their mortgage payments up to an annual limit of 9,015 Euros. The average saving in 2007, the last year for which figures are available, was 900 Euros. Given average mortgage terms of 24 years, the cost of using a mortgage to buy a home in Spain will go up by more than 21,000 Euros over the lifetime of the loan.
Mortgage tax relief is only available for loans on primary residencies, so holiday home and non-resident buyers will not be directly affected. However, to the extent that the move dampens demand in the domestic market, there may be a knock on effect on holiday home prices.
The government so far has only announced its intention and there are still hurdles to jump before the law is passed. Given that there are reported to be nearly
3 million unsold properties in Spain ,“it will be very difficult to take a step that discourages buying right at the time when there are more empty houses then ever,” one expert told the Spanish press.
Full story on
Spanish Property Insight .
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User Comments
Not good news and even worse is the fact that house purchases will be charged at 8% from July onwards compared with 7% currently. At a time when the Spanish government should be doing everything in its power to encourage house sales I would describe this as a retrograde step
Spain Tax,
http://www.spain-tax.com