The move is likely to have a detrimental impact on the property market, which is suffering from a major oversupply of new homes. Rather than help increase new homes sales, fewer would-be purchasers are likely to take the plunge and buy property in Spain, particularly new homes.
The country desperately needs to reduce its housing inventory to have any chance of recovering from the existing housing crisis, which is also dragging down the country’s wider economy.
“Spain desperately needs to sell a glut of new homes, and nurse it’s battered construction industry back to health, so what does the Government do? The one thing most likely to achieve the opposite,” said Spanish property commentator Mark Stucklin.
Second hand properties are charged with a different tax called the Impuesto de transmisiones IT, which usually range up to 7%, but this also set to rise.
Stucklin added: “With both VAT and the tax on resales [ITP] going up, we might see a big comeback in under-the-table cash payments, also known as ‘B money’, after years of steady decline.”