Sánchez announces tax exemptions for homeowners

Key measures to address housing crisis

by Lorraine Williamson
homeowners tax exemptions

Spanish Prime Minister Pedro Sánchez has introduced a series of measures to curb rising house prices and promote affordable rental housing. Among the proposals is a 100% income tax exemption for landlords who set rental prices according to the government’s price reference index.

Unlike previous policies, this measure applies nationwide and not just in areas classified as “stress districts.”

Expansion of benefits across Spain

Currently, landlords in high-demand areas benefit from tax exemptions of 70% or 90%, depending on rental price reductions. Sánchez’s proposal seeks to extend these benefits to a 100% tax exemption across Spain, encouraging more landlords to offer affordable rents.

Restrictions on non-EU homebuyers

To address speculative property purchases, the government plans to impose restrictions on non-EU citizens buying homes in Spain. For these buyers, a 100% tax rate will apply to property purchases. “In 2023 alone, non-residents from outside the EU bought 27,000 properties, primarily for speculation rather than residency,” said Sánchez. “This practice is unacceptable given the housing shortage we face.”

Changes to socimi taxation

The government will also reform the tax regime for Sociedades Anónimas Cotizadas de Inversión Inmobiliaria (socimis). Tax benefits for these real estate investment trusts will now only apply to properties rented at affordable rates. Additionally, tourist apartments will be taxed as businesses, ensuring parity with other economic activities like hotels. VAT will also be levied on tourist accommodations in regions facing housing or tourism saturation.

Tackling fraud in seasonal rentals

The government plans stricter regulations to combat fraud in seasonal rentals. A dedicated fund will support local and regional authorities in inspecting illegal tourist accommodations and addressing fraudulent housing practices.

Boosting affordable rentals and government guarantees

Sánchez’s measures aim to bridge the gap between wealthy property owners and struggling tenants. Initiatives include a support programme to refurbish vacant homes for affordable rent for at least five years. Government guarantees will also back landlords offering affordable rents, starting with properties rented to people under 35.

Launch of the public housing company

A newly established Public Housing Company will oversee 3,300 homes and two million square metres of residential land transferred by the government. Sánchez confirmed plans to incorporate 30,000 Sareb homes into the company, with 13,000 units ready for immediate use. The government will prioritise public ownership for all state-funded housing projects, ensuring these properties remain accessible and protected from speculative practices.

Addressing the housing supply challenge

Highlighting Spain’s housing deficit, Sánchez compared current construction rates to the property boom era. “During the boom, 400,000 homes were created annually, with over 600,000 built. Today, only 300,000 homes are being created, and fewer than 90,000 houses are under construction,” he said. The government plans to increase the construction of social housing to stabilise prices and improve accessibility in the medium and long term.

Strategic housing project in Valencia

The government will launch a strategic housing project (PERTE) in Valencia to modernise the construction sector and address housing shortages. This initiative will also contribute to the recovery of the local economy following the devastation caused by the Dana storms.

A comprehensive approach to housing reform

Sánchez’s proposals represent a multi-faceted approach to tackling Spain’s housing crisis. By promoting affordable rentals, curbing speculative practices, and increasing housing supply, the government aims to ensure access to quality, affordable housing for all citizens.

Also read: Sanchez unveils housing and tourist rental reform plans

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