The Government of Andalusia has given the green light to a decree that establishes a reduction of the Property Transfer Tax (ITP), which taxes the purchase of a used home, at 7%. In this way, the three rates set at 8, 9 and 10% disappear. In addition, it also includes a small reduction in the Tax on documented legal acts (AJD) that will go from 1.5% to 1.2%. This tax reduction will come into force the day after its publication in the Official Gazette of the Junta de Andalucía (BOJA) until December 31, 2021.
With this tax reduction, the Andalusians will have 223 million euros more in their pockets according to calculations made by the Government spokesman, Elías Bendodo. The current Vice President of the Government, Juan Marín, has assured that for a house of 180,000 euros the fee to be paid by the ITP is currently 14,400 euros when paying the rate of 8% of the first tranche of the rate (which applies up to 400,000 euros ), while with the approved reduction, 12,600 euros will be paid, that is, 1,800 euros less.
And in the case of the purchase of a garage space from an individual for 24,000 euros, the ITP to be paid would be 1,920 euros (8% rate), which would remain at 1,680 euros with the new tax reduction, which represents a savings of 240 euros.
On the other hand, the public deed by which the transfer of a new home valued at 200,000 euros is formalized by a developer company would be taxed with the regulations in force (Legislative Decree 1/2018) at a general rate of 1.5% , which would result in a tax rate of 3,000 euros. With the reduction to a general rate of 1.2%, the tax rate is 2,400 euros, which represents a saving of 600 euros.
Reactivation of the real estate sector and incentive for new construction
The measure, which will take effect from the day following its publication in BOJA until December 31, 2021, pursues a double objective. On the one hand, to promote the reactivation of the real estate sector, through a reduction in the cost of taxation linked to the acquisition of second-hand homes; on the other, to encourage the supply of new construction at more affordable prices, by reducing the fiscal costs levied by the AJD modality. Ultimately, the ultimate purpose is to alleviate the tax burden on access to housing.
The Andalusian Government adopts this decree law in continuity with the urgent measures approved by the Governing Council to alleviate the crisis situation generated by the Covid. In particular, in the tax area, it is necessary to continue implementing tax support measures to mitigate the possible impact of the containment economic scenario on the Andalusian economy.
This measure delves into the tax cut approved in April 2019, which has entailed:
- In the Personal Income Tax (IRPF), the reduction of the regional sections to make them equal to the state level (from eight existing sections in 2019 they will go to five in 2023) and a reduction in the rates applicable by sections of form progressive (from 10% to 25.5% in 2019 they will go to a range of 9.5% to 22.5% until 2023), measures that benefit 3.7 million taxpayers.
- The establishment of reduced tax rates in the Tax on Patrimonial Transmissions and Documented Legal Acts (ITPAJD). Thus, a reduced rate was established for large families in Onerous Asset Transfers of 3.5% compared to the previous 8% for the purchase of a habitual residence of up to 180,000 euros.
- Elimination of the increased rate in the AJD Tax on property transfers, in which the VAT exemption is waived (which was in force since 2003), which went from 2% to 1.5%.
- The 99% discount on Inheritance and Gift Tax (ISD) for Groups I and II.
The Andalusian Government maintains that with the first tax cut that was approved as soon as the PP-Cs coalition took office in 2019, instead of reducing income, they achieved an increase in them due to the 118,000 increase in taxpayers in the community autonomous.
In addition, the Andalusian Government is studying to reduce the autonomic section of personal income tax, although this operation will be carried out through a bill that will be raised in Parliament by the groups of the PP, Citizens and Vox.