Tax Burden on Housing: A Construction Industry Perspective
In Spain, representatives of the construction industry have called for a review of tax policy in the real estate sector. According to their estimates, taxes and fees make up about a quarter of the total cost of an apartment, significantly impacting final prices for buyers. Specifically, there is discussion about lowering property tax (IBI) and value-added tax (IVA) rates, as well as introducing additional tax deductions for the purchase, sale, and construction of housing.
Proposals for Tax Reform and Their Consequences
Among the suggestions are introducing a reduced IVA rate of 4% for new properties, cutting the property transfer tax (ITP) and the stamp duty (AJD), as well as clarifying the tax base for the local construction tax (ICIO). Experts believe these measures could make housing more affordable and boost market growth, especially given that a significant portion of the housing stock requires renovation and improvements in energy efficiency.
Special attention is being given to the issue of inheriting real estate. In some regions, such as Madrid, significant exemptions on inheritance tax are already in place, but industry representatives believe these benefits should be broadened. This would help prevent situations where heirs are forced to sell property just to pay the required taxes.
Bureaucracy and Complexity of Tax Procedures
Construction companies point out that the process of buying and building housing comes with numerous taxes and fees at various levels—from local municipalities to autonomous communities and the national government. As a result, buyers and developers face up to 14 different taxes and charges, which not only increase costs but also complicate the overall transaction process.
As a solution, it is proposed to simplify the tax system, eliminate duplicate fees, and reduce administrative barriers. According to sector representatives, this would help speed up procedures and cut costs for all market participants.
Initiatives for tenants and homeowners
In addition to changes in the taxation of purchases and construction, support measures for the rental market are also being discussed. Specifically, there is a proposal to introduce additional tax incentives for owners who rent out housing at affordable prices. There are also considerations to change the taxation of rental income to make this segment more attractive for investors and reduce the tax burden on landlords.
Overall, the construction sector insists on a comprehensive approach to solving the housing issue, with tax reforms and political will playing a key role. The affordability of housing remains one of the most pressing issues for Spanish society, and any changes in this area could affect the interests of millions of citizens.
