The Junta de Andalucía has unveiled a series of fiscal incentives designed to breathe life back into the region’s dwindling rural municipalities. At the heart of this initiative is a substantial reduction in property transfer tax (Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados – ITP/AJD) for homebuyers in eligible areas, alongside increased financial support for families with children.
Targeting rural decline
The incentives apply to municipalities with fewer than 3,000 residents, a category that includes 426 towns and villages across Andalucía. Granada province leads the list with 121 qualifying municipalities, followed by Almería (69) and Málaga (59). Other provinces affected include Jaén (56), Huelva (49), Córdoba (37), Sevilla (24), and Cádiz (11). The government has provided a detailed list of eligible locations in an official BOJA document.
A major tax break for homebuyers
The standout measure in this package is the drastic cut to ITP/AJD, slashing the property transfer tax from 8% to just 3.5%. This applies exclusively to purchases of residential properties in qualifying municipalities, with a cap on the purchase price of €150,000.
For buyers purchasing at the upper limit, this translates into savings of €6,750—a significant incentive to encourage investment in these areas.
Boosting family support
In addition to the property tax cut, the Junta de Andalucía is doubling financial aid for families with children in depopulating municipalities. The support per child—whether through birth, adoption, or foster care—rises from €200 to €400 annually. This assistance will be delivered via personal income tax (Impuesto sobre la Renta de las Personas Físicas – IRPF) to Andalusian residents.
The government’s rationale
Carolina España, the regional Minister of Economy, Finance, and European Funds, has framed these measures as part of a broader transformation of Andalucía’s tax landscape. She claims the region has gone from being a “tax hell” to having the second-lowest tax burden in Spain, attributing this shift to an influx of 200,000 new taxpayers in 2024.
Will it work?
While the incentives are undoubtedly attractive, their effectiveness in reversing depopulation remains to be seen. Several factors will influence their success:
- Housing availability: Are there enough suitable properties on the market in these municipalities?
- Employment prospects: Can these areas offer viable job opportunities, or will new residents rely on remote work?
- Quality of life: Will families and individuals find rural living in Andalucía appealing in the long term?
Fiscal and social implications
From a public finance perspective, the tax cut means lower immediate revenue for the regional government. However, if the policy succeeds in attracting new residents, the long-term economic benefits—higher local spending, business activity, and a broader tax base—could outweigh the initial cost.
On a social level, the policy aims to create a more vibrant rural landscape. However, the distribution of benefits must be monitored to ensure that lower-income families and younger buyers—who are more likely to settle long-term—aren’t left out.
Check eligibility: Review the BOJA document for the official list of municipalities here.
