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Brits buying second homes in Spain set to be hit with 100% property tax

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Spanish Prime Minister Pedro Sanchez has unveiled a controversial proposal that would burden non-EU property buyers who lack legal residency with taxes equivalent to the full purchase price of their new home.

The move represents a new effort by Spain’s Socialist government to discourage speculation and ease pressure on a housing market suffering from high prices – but it will hit British buyers particularly hard.

Under the draft measure, any non-resident from outside the EU who buys a property worth more than €1 will be subject to a 100 percent tax rate on the value of the home. The staggering tax, included in a wider package of housing reforms, comes as official statistics show British buyers bought more than 12,000 Spanish properties in 2023 alone. Although this figure is down on the previous year, it highlights the importance of Spain’s second home market for Britons seeking a foothold on the sunny Iberian Peninsula.

Sanchez’s announcement, made in Madrid on Monday, outlined additional plans to increase taxes on holiday rentals – while ensuring they are taxed “like a business” – amid concerns about growing gentrification in popular tourist areas and complaints that locals are being priced out of housing. market. Meanwhile, his socialist administration aims to convert hundreds of acres of state-owned land into social housing through the newly created Public Housing Agency.

Going through these changes will not be easy at all. Sánchez’s minority government faces stiff opposition from conservative politicians, who view the proposals as overly interventionist, and from the far left, who argue that the reforms do not go far enough in helping renters. However, the Bank of Spain recently warned that extended family rents could have “negative economic and social impacts”, giving urgent impetus to the discussion.

Now homebuyers, landlords and holiday rental companies in Britain alike are watching closely to see how the parliamentary negotiations develop. If approved, this unprecedented 100% tax rate for non-EU residents could profoundly reshape Spain’s real estate market, impacting the tourism economy in the country and beyond.


Jimmy Young

Jamie is Senior Reporter at Business Matters, with over a decade of experience reporting on UK SME business. Jamie has a degree in Business Administration and regularly participates in industry conferences and workshops. When Jamie is not reporting on the latest business developments, he is passionate about mentoring up-and-coming journalists and entrepreneurs to inspire the next generation of business leaders.

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