We wish to draw attention to this matter as it is of great importance, since it may well affect those readers who are buying, or will be buying, a new property in the coming months.
The following main points are worth highlighting:
1) REDUCTION OF THE VAT TAX: the change means a reduction from the current 8% VAT rate down to 4%.
2) AFFECTS ONLY HANDING OVER OF DWELLING: This rebate applies to the delivery of houses, buildings or those parts of buildings able to be used for living purposes and includes the parking spaces (maximum two) annexed to the dwelling and jointly purchased / transferred in the same deed.
Therefore it will not apply in the delivery of any other type of constructions which are not suitable for living, such as commercial premises, parking spaces independently transmitted, etc.
This reduction is not applicable to letting contracts as these are not considered a handing over or transfer.
3) It solely refers to delivery of NEW HOUSES OR FIRST TRANSMISSION.
4) It is a TEMPORARY CHANGE. The approved reduction has a clear provisional TEMPORARY character as it will be exclusively applicable from 20 August 2011 (when the RDL 9/2011 came into force) to 31 December 2011.
It seems evident that this new Decree-Law has been approved in order to encourage the acquisition of brand new properties (from promoters / developers) by offering a clear tax advantage of 50% reduction of the VAT rate to be paid.
This contrasts with the lack of tax incentive or tax rebate in the purchase of resale properties subject to TRANSFER / TRANSMISSION TAX (ITP/TPO) which depends on each Autonomous Community (divisions of the Spanish Estate) where the property is located. For example in the Valencian Community this Transfer Tax is set at 7%.
Thus, this new Decree-Law encourages the purchase of NEW HOMES versus the purchase of resale properties where the Tax is practically double.
From all the above specified please be aware that if you are in the process of purchasing a NEW first hand house / property from a promoter or developer, this measure can mean an important benefit for you.
If this is your case or the case of someone you know please do not hesitate to contact us.
The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.
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