The Latest Psc-comuns Agreement Consolidates the Tax Hell That Is Catalonia

Housing was the main focus of the legislative agreements between PSC and Comuns, who have now sealed a major agreement in this area. It includes several measures such as the sanctioning regime demanded by the ecosocialists, doubling the tourist tax and the construction of 1,200 public housing units. There is also an increase in the tax on housing transactions.

Comuns present it as an anti-speculation tax whereby large holders will pay double the property transfer tax (ITP). The rate goes from 10% to 20%. If they previously paid 50,000 euros in tax for a 500,000-euro apartment, they will now pay 100,000 euros in tax.

Although the tax is intended to prevent speculation by large holders, in reality, the modification of the property transfer tax is progressive. This means it will also affect lower brackets.

New Increase by Brackets

The 20% will apply to large holders as well as to the purchase of entire buildings, with the exception of buildings with up to four units, provided the buyer is not a large holder and it is intended for primary residence within the first three years. But alongside this increase, there are other progressive modifications to the ITP:

• For property transfers up to 600,000 euros, 10%
• For transfers between 600,000 and 900,000, 11%
• For transfers from 900,000 to 1.5 million, 12%
• For transfers over 1.5 million, 13%

The first bracket remains unchanged because in Catalonia the ITP was already 10%, among the highest in the entire Spanish state for the purchase of a second-hand home. But now acquisitions exceeding this amount will pay more taxes. And at the rate market prices are going, many Catalans who are not precisely large holders will end up being affected.

The Fiscal Hell Continues

In other words, instead of lowering the ITP to encourage young people to buy homes, they decide to raise taxes with new brackets. A reflection of the fiscal policy of Catalan governments in recent years, which has turned Catalonia into a fiscal hell.

Moreover, the new increase by brackets could substantially alter the market, causing an increase in transaction prices. This is warned by real estate sector experts. If you raise the ITP for a buyer, even if they are not a large holder, you end up affecting the sale price of the property in the market.

In the case of second-hand homes, it is the autonomous communities that decide the price of the transfer tax. Catalonia is the community where the most taxes are paid, where there are more own taxes, and also where it is most expensive to buy a second-hand home.