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Spanish treasury officials reported to be considering temporary reduction in holiday-home tax

spanish holiday home imputed income tax
You pay income tax on second-homes in Spain even if you don’t rent them and can’t use them.

The Spanish press reports that high-ranking officials in the Tax Office are toying with the idea of temporary tax breaks for holiday-home owners who can’t use their properties due to Covid-19 travel restrictions.

Thanks to Spain’s draconian coronavirus lockdown policy, travel to and from Spain is highly restricted for the time being, as is travel between Spanish provinces. This means that many second-home owners, both resident in Spain and abroad, are unable to enjoy the use of their properties in this period.

With this in mind, high-ranking Treasury officials are said to be looking at the possibility of a temporary reduction in taxes paid by second-home owners, such as the imputed income tax owners have to pay.

“It’s not unreasonable for taxpayers to have doubts about this in their next declaration,” said a deputy director of the income tax department, participating in a recent discussion for tax wonks organised by Lefebvre, a company specialising in legal information. “Undoubtedly, it’s one of the things that can be debated,” the official said.

The regulations as they stand do not contemplate a temporary discount like this, so the law would have to be changed to make it possible. But there is time to do that, “as this measure would not be effective until the next declaration period between April and June 2021,” said the same official.

Whilst it’s nice to think that second-home owners will be offered tax relief on properties they have been prevented from enjoying, it’s probably just wishful thinking. It soon becomes clear there’s nothing concrete on the table. “Will the law be modified or not? I really don’t know,” said the official. “Will there be enough fiscal empathy or not? I would like there to be, because I always think that things can be done to solve problems. Even if the tax policy can’t change everything, a policy that’s a bit more empathetic in some small measures with no great cost I believe is always interesting.”

Residents and non-residents alike who own a holiday-home in Spain have to pay an imputed income tax even if they don’t rent it out, because the Spanish tax code asserts that owners get a ‘benefit in kind’ from their holiday-homes that is fair game for taxation. The imputed income varies between 1.1% and 2% of the cadastral value, so between €220 and €400 p.a. imputed income-tax on a home with a cadastral value of €100,000.

SPI Member Comments

2 thoughts on “Spanish treasury officials reported to be considering temporary reduction in holiday-home tax

  • John Hughes says:

    This imputed income tax is so unfair.
    What with having to have a licence to rent out properties in most areas of Spain, how can the authorities justify imposing this tax to non-registered holiday home owners?
    This is what really gets me about the Spanish system, likewise with the previous incarnation of the plus valia tax.

  • markirlanda says:

    In my opinion, there is no way that the new socio-marxist Govt will concede to a tax reduction that benefits a sector of property owners who they consider as “privileged”.

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