Spain, Portugal to ban Non EU residents from buying property

Could Brits and Americans have their Spanish retirement dream ruined?

Spain has recently announced plans to impose a significant tax on homes purchased by non-EU residents, aiming to address its housing crisis. This measure includes a potential tax of up to 100% on the value of properties bought by individuals from countries outside the European Union, such as the UK. The Spanish Prime Minister, Pedro Sánchez, highlighted this as part of a broader package of 12 measures to tackle housing affordability issues, explicitly targeting speculative buying by non-residents.

This initiative is seen as an attempt to prioritize housing availability for local residents amid rising property prices and a shortage of affordable homes. However, these proposals are still pending parliamentary approval, where Sánchez has faced challenges in securing a majority.

It is thought that Portugal and other EU countries may follow suit. Parts of Portugal have become totally unaffordable for locals.

Spanish Property Tax

In Spain, property tax is known as Impuesto sobre Bienes Inmuebles (IBI). It’s a municipal tax levied on the owner of a property, including homes, apartments, and commercial buildings. The tax rate varies depending on the region and municipality.

Here are some key points to consider:

Tax rates: Typically range from 0.1% to 1.1% of the property’s value, depending on the region and municipality.
Tax payment: Usually due twice a year, in June and December.
Value: The tax is calculated based on the property’s value, which is typically determined by the Registro de la Propiedad (Property Registry).

If you’re considering purchasing a property in Spain, it’s essential to research the specific tax rates and regulations in the region you’re interested in.

This includes transferring land to a new Public Housing Company that the government says it will use to build thousands of new affordable rental houses.

Sanchez said in the first half of this year the company will begin to incorporate more than 30,000 Sareb homes, some 13,000 with immediate effect.

The government also hopes to ‘rehabilitate’ vacant homes for additional ‘affordable rental’, offering incentives to those who renovate flats and make it available for an extended period of time.

It hopes an income tax exemption for owners letting out their homes according to the ‘Reference Price Index’ will encourage a healthier rental ecosystem.

Local homes for local people?

In a bid to ensure Spaniards can access homes before wealthy non-EU citizens, the proposals also include a measure to ‘limit’ the purchase of homes by people who ‘do not reside in our country’.

This is to be tightened with regulations on fraud for seasonal rentals, disincentivizing those who illicitly look to make the most of Spain’s lucrative tourist season.

‘The objective with all these measures is clear. What we want is to protect citizens, to find a better balance between tourism and investment, which are two key activities for our economy,’ Sanchez said with the announcement.

‘And also, logically, access to housing, which is a constitutional right of the people and a legitimate objective of our Government when we say that we want to make it the fifth Pillar of the welfare state.’