Andalusia’s Tax Reforms: A Catalyst for Foreign Investments
In 2019, the regional government of Andalusia implemented significant changes to the inheritance tax. These changes essentially abolished inheritance tax in the region, a move that has been instrumental in attracting foreign investments. This marked a new era in tax planning in Andalusia.
Impact of Tax Changes on Property Transfer and Stamp Duty
While the changes to the inheritance tax were significant, they were overshadowed by the tax reforms introduced in April 2021. These reforms drastically reduced both Property Transfer Tax (resales) and Stamp Duty (off-plan property) in Andalusia.
Reduced Taxes and the Mini Property Boom in Andalusia
The new tax policy, which significantly reduced taxes on buying and selling property, has sparked a mini property boom in Andalusia, particularly in the high-end market. This is largely due to the fact that the tax savings for buyers increase exponentially with the sale price. In simple terms, the higher the sale price, the more a buyer can save in tax.
How Tax Laws are Encouraging Foreign Investments
For instance, a buyer can save 15% in tax on a €500,000 resale, while on a €3,000,000 property, the savings can be as high as 27%! This change in tax laws is a game-changer, encouraging foreign investments on a large scale.
High-End Property Sales in Marbella
This has resulted in multiple villas at exclusive gated resorts in Marbella, such as Sierra Blanca and La Zagaleta, selling well this year with price tags over 20mn euros. This trend has also boosted sales of villas within the million range.
COVID-19 and Changing Consumer Habits
The COVID-19 pandemic has also influenced the property market, as it has changed the consumer habits of high-net-worth individuals (HNWI) and ultra-high-net-worth individuals (UHNWI). These buyers are now seeking properties with ample spaces, secluded gardens, and large open terraces. This has increased the demand for luxury rural properties and large villas.
Marbella: A Safe Haven for Discerning Buyers
Discerning buyers are also avoiding large, crowded cities and are actively seeking virus-free safe havens. Marbella, with its abundant villas with lush mature gardens and large open spaces, is viewed as one such haven.
Factors Driving the Upsurge in the Sale Market in 2021
The combination of reduced property taxes and new consumer habits induced by the pandemic has created the perfect conditions for the upsurge in the sale market in 2021. This explains why Marbella’s luxury market is currently leading the real estate market recovery. The market is indeed booming!
