Proposed Housing and Tax Reforms in Spain: What Expats Need to Know

Spain’s Government Targets Housing Accessibility and Speculation

Prime Minister Pedro Sánchez has announced a series of proposed housing and tax reforms aimed at addressing Spain’s ongoing housing crisis. These measures, which have yet to be approved by Congress, focus on limiting speculative property purchases by non-residents, revising tax policies, and boosting the availability of affordable housing.

For expats, understanding these proposed changes is essential to navigating the Spanish property market and safeguarding investments.

Key Proposals Impacting Non-Resident Buyers

1. Increased Taxes for Non-EU Non-Residents

The Spanish government is proposing a 100% increase in property purchase taxes for non-EU buyers who are not residents in Spain. This measure seeks to prioritise housing availability for locals and discourage speculative buying by foreign investors.

In 2023, non-residents from outside the EU purchased 27,000 properties, many of which were for investment rather than residential purposes. According to Sánchez, speculative acquisitions of this nature contribute to housing shortages and inflate property prices.

2. Reclassification of Tourist Rental Properties

Another proposal involves reclassifying tourist rental properties as commercial businesses. This would subject these properties to taxes akin to those paid by hotels, including VAT, aligning taxation with other commercial accommodations.

Additional measures include:

• Strengthening enforcement against illegal or fraudulent short-term rentals.

• Establishing a dedicated fund to support local authorities in inspecting and regulating such properties.

3. Changes to Wealth and Rental Income Taxes

• Wealth Tax: Proposed reductions in exemptions for non-residents may increase tax liabilities for property owners.

• Rental Income Tax Incentives: A new scheme could offer up to 100% exemptions on rental income tax (IRPF) for landlords who lease properties under affordable housing schemes.

Boosting Affordable Housing in Spain

To address the lack of affordable housing, Sánchez has outlined additional initiatives aimed at increasing rental options and supporting local communities:

• Renovating Vacant Homes: Financial assistance for homeowners to refurbish unused properties and lease them affordably for a minimum of five years.

• Public Housing Projects: The creation of a state-owned housing company to manage affordable rentals. The initial phase includes integrating over 30,000 properties from Sareb, with 13,000 units immediately available.

• Rental Market Guarantees: A government-backed program will protect landlords and tenants in affordable rental agreements, with a focus on supporting renters under 35.

Important Considerations

It is crucial to note that these measures are proposals and have not yet been passed into law. Approval by Congress is required, and the legislative process may result in amendments or delays. Until finalised, these changes remain speculative.

How Expats Can Stay Informed

If these reforms are approved, they could have far-reaching implications for non-resident property buyers and expat homeowners in Spain. From increased taxes to stricter regulations, understanding the impact of these changes is vital for making informed decisions.

For guidance on how these proposed measures could affect your property investments or rental income, contact 247 Expat Insurance. Our team is here to help expats navigate the complexities of the Spanish property market and ensure your assets are protected.