There was a surprise announcement last Friday by the Government to temporarily reduce the taxes (IVA) for all buyers of all new properties. This reduction from 8% to 4% effective immediately is a temporary reduction which will run until the end of 2011.
According to Jose Blanco, Minister of Development, he considers that these four months between now and January are “sufficient” and also considers this reduction will have a positive impact, as in recent months homeownership was “below what you would expect.” and well below that of our European neighbors during this crisis.
The property sector has been struggling in Spain since its peak in 2007 and with the banks exposure to loans has forced many to offer properties at huge discounts with 100% mortgages. This reduction off the price of a new build property is a huge benefit and will save the buyer thousands. The Government say this is an attempt to reactivate growth and stimulate the construction industry. It is not only beneficial to buyers…it will certainly boost the economy and definitely create more employment!
With the on-going crisis, there are already many heavily discounted new build properties available and an additional 4% tax saving on these properties will surely be a great incentive to anyone considering buying. Clients who purchase a property in the region of €200,000 would only have to pay €8,000 instead of €16,000, thereby freeing up this extra cash to use on essential furniture or decoration etc
Properties are very competitively priced before construction as developers are eager to sell as many units as possible and therefore you are sure to find a real bargain…Off-plan properties increase in value at every stage of construction, meaning they are an excellent investment opportunity with a guaranteed return on your investment before you have even moved into the property!
Unfortunately, this does not include the Canaries:
There are two taxes which are payable on property purchases. The first is a 6.5% tax (Impuesto sobre Transmisiones Patrimoniales) on resale properties: it is essentially a transfer tax payable on transfer of title, rather than a sales tax. The real “sales” tax in Spain is payable on new property, and this is IVA, effectively the same as our Value Added Tax.
Here in the Canaries, however, buyers of new builds do not pay IVA at all. Rather, they pay the specific Canarian tax IGIC at the rate of 5%. (For new properties a document registration tax … AJD – Impuesto sobre Actos Jurídicos Documentados … of 0.75% is also payable).
Although those purchasing re-sale properties here cannot take advantage of this temporary reduction in IVA, buyers do benefit from a better tax system. Canarian property buyers make a good saving compared to those in Spain as IGIC is set by the Canarian Government, not Madrid and therefore cannot be halved by the national Government as IVA has been. IGIC set at 5%, is considerably lower than Spains’ IVA at 8%.
For an example of new build prices, there is a marvelous development located in the popular residential area of El Galeon in Adeje
This development is made up of spacious 1, 2 and 3 bedroom apartments and duplexes…Each apartment consists of 1 bathroom, either an American or separate kitchen, lounge/dining area and terraces enjoying either fantastic sea views or relaxing pool views.
Some properties on this development also come with a garden as well as a patio or terrace. The duplex apartments on this complex consist of a bedroom downstairs and a bedroom upstairs. The complex has a communal swimming pool, gardens and is located close to bars, restaurants, shops, schools and excellent public transport links - 10 minutes drive from the beach!
There is also the option to purchase a private garage on the complex at the price of 12,020 Euros
Adeje is a lovely residential area with all the amenities you could ever need and has a true cultural feel to it, with highly regarded restaurants, agricultural markets, Barranco del Infierno (which is well worth taking a walk around) and of course lots of fiestas which are celebrated locally throughout the year.
These properties are also being offered with the opportunity of 100% mortgages!
If you are in a position to buy property here in Tenerife, act quickly as this reduction is due to expire in a matter of months and foreign investment in property is expected to surge before the end of the year.
Sunway Tenerife have over 25 years experience, please call for more information about buying Tenerife Property. Sunway staff are able to offer you a wide and varied selection of property across the south of Tenerife as well as one of the most professional services on the island!
