Funds and real estate companies must now pay double taxes in Catalonia.
The property transfer tax has risen from 10% to 20%, and the tax has also been increased for the purchase and sale of second-hand homes worth more than €600,000.
BarcelonaIt was a commitment made by Salvador Isla's government, agreed upon with the Comuneros (Commons). And this weekend it came into effect: the property transfer tax (ITPi AJD), which taxes second-hand property and real estate transactions, increases for properties over €600,000 and doubles, up to 20%, for purchases of buildings and from large owners, such as funds or large real estate companies. The Catalan law defines large owners as those with more than 10 properties or a built-up area of more than 1,500 square meters, but it is reduced for more than five properties in areas declared under pressure by the Generalitat (Catalan government), that is, where prices are regulated. There are 271 municipalities in Catalonia with this regulation, including Barcelona. These increases were included in a decree from last March, ratified in May, and which was scheduled to come into effect within three months, that is, as of last Friday, June 27.
Until now, there were two tax brackets, collected by the Catalan Tax Agency (ATC) because it is a ceded tax. The first was 10% for properties worth up to one million euros, and the second was 11% for higher prices. Now, a progressive rate proportional to the value of the property has come into effect. For all taxpayers who are not large holders and do not fall into the 20% bracket, up to €600,000, the tax is 10%; from €600,000 to €900,000, it is 11%; from €900,000 to €1.5 million, it is 12%; and from €1.5 million and above, it is 13%. With the implementation of the measure, the tax bill for companies specializing in real estate investment (SOCIMIs), funds, and large real estate companies will double. Until now, they had to pay 20,000 euros for a second-hand home worth €200,000, but now they will have to pay €40,000. The initial objective of this increase is to prevent or reduce the accumulation of rental housing and speculative revaluation.
Social developers and non-profit entities are exempt from the 20% tax; and when the property is used as the corporate headquarters or workplace of the large holder, as well as when it is a natural person and includes a maximum of four homes, provided they are used as the primary residence of the holder or a family member.
But not all are increases. The decree that comes into effect includes a change in the age of young people who until now enjoyed the reduced 5% rate for the purchase of their primary residence, from 32 to 35. The same advantage is also being extended to the purchase of primary residences by victims of domestic violence.
The measures that come into effect have drawn criticism from various stakeholders in the real estate sector, who warn that this tax increase could affect residential investment in Catalonia. In fact, they warn that it could further curb supply and, therefore, put further upward pressure on prices. The Association of Rental Property Owners (Asval) states that the introduction of measures that are "highly penalizing and complex to implement" has a negative impact on property owners. And this, they add, exacerbates a "worrying situation of the disappearance of existing supply." The industry is still hoping for short-term changes that will clarify some concepts, such as the concept of a large holder and other aspects.
