British tourists could avoid Spain 100% tax bombshell with little known loophole

Madrid may have waged war on British expat hopefuls with a proposed property tax hike for non-EU residents, but experts have told Express.co.uk how you can still buy a home on the cheap. 

Spanish President Pedro Sanchez announced “unprecedented” proposals to try to limit property purchases by non-resident Brits earlier this week as he moves to shore up housing for locals amid a crisis. 

The 100% tariff imposed on the value of a new property purchase may put some potential buyers off. 

But there are still ways to get a good price if you’re looking to settle down or buy a second home in sunny Spain. 

Javier Rodríguez, from Spain’s Expat Agency, suggests looking into second-hand purchases to swerve the additional costs.

He told Express.co.uk: “Sánchez recently mentioned plans to increase the tax burden on non-EU residents not residing in Spain to 100% when they buy a house in Spain, prioritizing housing for residents.

“However, the case of second-hand properties, whose tax (Impuesto de Transmisiones Patrimoniales) is the responsibility of the autonomous communities, is still pending.”

That means, for now, different regions have varying taxes on property purchases on second homes. 

To bag yourself the cheapest deal, Mr Rodríguez suggests comparing the property transfer tax – the tax you pay when purchasing a home – that each Autonomous Community decides to apply.

There are 17 regional districts across Spain, with Andalusia being the most popular among British ex-pats and tourists.

Andalusia boasts of hotspot cities like Malaga, Seville, and Granada, with the Costa del Sol and other locations Brits flock to. 

In 2021, the Andalusian government slashed the Transfer Tax to a fixed 7% sum for resale properties, a vast amount lower than the 100%  tax for new purchases set to be rolled out by the central government. 

But there is more good news for buyers eyeing up this region of Spain. 

Mr Rodríguez explains: “In fact, in the case of Andalusia, the current government is opposed to the Central Government, so it wouldn’t surprise us if they even reduced this tax as a counterpoint to Sánchez’s government.”

Meanwhile, Ian Harris from The Spanish Property Specialist is sceptical that Sanchez’s proposed tax will proceed at all. 

He told Express.co.uk: “We spoke with one of the reputable lawyers close to Alicante who we deal with and they concurred with this view. 

“They told us that ‘Real estate regulations and taxation fall under the jurisdiction of regional governments rather than the national government.” 

He agreed that Andulsia, the Murcia and Valencia regions, are safe investments. 

That’s because they are “currently governed by conservative administrations and are unlikely to implement such measures even if they are approved nationally”. 

Mr Harris added: “For instance, a previous real estate law passed several months ago received minimal attention because the regional government in Murcia chose not to apply it.”

Lawyers told him: “In light of these points, there is no immediate cause for significant concern. 

“This appears to be more of a political manoeuvre aimed at deflecting attention from current challenges faced by the national government rather than a genuine attempt to penalize non-EU citizens interested in purchasing property in Spain.”

To get the best value possible, Mr Harris recommends finding a good agent with a good track record of the Spanish property market to help and guide you through the buying process. 

He claimed: “Signing up with an established currency exchange company can save you thousands of euros – which your Agent should be able to help you with. 

“When buying a resale property, don’t be afraid to initially make a reasonably low offer through the Agent.

“Ask your agent to help you organise NIE’s, visa applications, opening a bank account, power of attorney, tourist license, guidance on lawyer selection and everything you need to be able to buy a property in Spain.”