100% tax on Costa del Sol property for non-EU buyers

Spanish Prime Minister Pedro Sánchez recently proposed implementing a new policy of taxing non-resident non-EU buyers 100% of the value of the property.

This drastic measure, announced at an economic forum in Madrid, is viewed as the first step in preventing what he has called a ‘two-class society of rich landlords and poor tenants”. The aim is to give residents priority by discouraging foreign buyers from purchasing property for financial reasons, rather than as a home to live in.

According to Mark Stucklin of Spanish Property Insight, the majority of Brits are buying to gain access to the sunshine lifestyle, as opposed to speculation, with many choosing to reside in Spain permanently and are welcomed by the community.

It is important to remember, that regardless of sensationalist headlines, the proposed tax is not an attack directed at specifically British buyers, as they will apply to any third-country buyers, including Morocco and the USA. Statistics published by the General Council of Spanish Notaries show that in Q1 and Q2 of 2024, 9,166 properties were bought by non-EU buyers, only 3.480 homes were sold to British buyers).

The tax is viewed as part of the antidote to the growing housing shortage in Spain, where one third of all properties are designated as holiday homes. The high demand amongst wealthy foreign buyers and the lack of new properties being built, is pricing the local residents out of the market.

Although it is clear that the government needs to take action, it is an extremely complicated issue which cannot be solved by singling out non-EU buyers. In some regions, like the Costa Blanca and Costa del Sol, there are equal numbers of non-EU and EU second home owners, of which the latter would not be affected by the tax hike.

The best way to avoid this tax is to get your paperwork in order, get in touch with an experienced real estate agent and buy now. Even if the proposal is agreed by the Spanish Parliament (which is not guaranteed), it will take time for the policy to be scrutinized, ratified and implemented, which could take anything up to six months. And even though the Golden Visa scheme will end in April 2025, there are other legal loopholes that could be explored, such as purchasing the property in the name of a relative who holds an EU passport or by setting up a Spanish company.

If you are considering purchasing property in Spain, whether your preference is for golf apartments in Estepona or a luxury villa in Marbella, now is a good time to put your plans into action.  The price of property for sale on the Costa del Sol is increasing year upon year, due consistent high demand and an imbalance of supply.

The potential rise in purchase tax should serve as an added incentive to purchase a Spanish property sooner rather than later, therefore ensuring a savvy investment that can be enjoyed for many years to come. If you wish to discuss alternative buying arrangements, Pardalis Estates can introduce you to experienced English speaking Spanish lawyers.

Together with our expert help, local knowledge and legal advice we can secure your dream home on the Costa del sol.

In the meantime, you can watch this video for more information.