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Taxes make new homes 20pc more expensive

A study by the real estate company Colliers shows that taxes and red tape make new homes 20% more expensive on average.

“This means, basically, that the buyer of a home of 100 m2 would have been able to afford a home of 120 m2 in a scenario without fiscal charges,” say Colliers. Buyers get less living space for their taxes.

They also make the point that the average family could save up to buy a home of 250,000€ much sooner without all the tax burdens – between five and ten years sooner.

Here are all the official costs identified by the report that make new homes in Spain 20% more expensive.

Land development

  • Residential developers pay an ‘urbanisation surcharge’ for building permits that make residential development more expensive than other types of development.
  • The ‘obligatory transfer’ of 10% of building land to town halls also increases the cost of building new homes.

Construction charges

  • Building licence
  • Tax on Construction, Installations and works (ICIO)
  • Stamp Duty paid by developers (AJD)
  • First Occupancy Licence

Home purchase

  • VAT (10%)
  • Stamp Duty
  • Plusvalia (paid by the developer)

This report does not mention the time it takes to get planning permission in Spain, which also adds to the cost of building new homes. A study by the developers’ association of Madrid (ASPRIMA) published in 2020 found that planning delays added an extra €13,000 on average to the cost of new homes in Spain, rising to €39,000 in the Majadahonda district of Madrid.