News in the Spanish media about proposed tax reforms designed to draw more funds into the treasury to help the Spanish government´s spending requirements. Although the way it seems to be going it looks like they are going to need an increasing amount of dough to support the growing levels of unemployment. One in five of the workforce, or thereabouts, since you ask.
Nobody seems to have mentioned real estate taxes in the proposals though, which is amazing, seeing as Spain´s problems are inextricably linked to their real estate bubble.
All talk is of raising more money from taxes
Funnily enough, there must be almost no money coming in from property taxes at the moment, as nothing is selling.
So, why have them at all ?
It was a market that has over 10% cost of entry (on top of the purchase price) 7% IVA/transfer tax and 1% stamp duty.
And the taxes on mortgages and remortgages are also prohibitively expensive.
That is before we mention the ridiculous notary system
And for selling and buying another property you had to pay the costs again on your new place
This was a rubbish expensive system that worked for a number of years in a rising market
Well I am sorry to say that the market has gone - probably for good
So, get rid of the taxes, as there is no money coming in now anyway
What will this do and how will it help ?
Well, it will mean that a 70% mortgage will mean you need about 33% of deposit instead of 43%
And if clients can freely remortgage to better deal, they can save money, spend more in the economy, and create a bit more competition with the Spanish banks
The Spanish banks will have less clients defaulting, and some more of the empty stock that they are holding may begin to be sold as all of a sudden it is another 10% cheaper, without any fall in the market price
People that may have been interested in buying, can now maybe afford a property more easily, as they had to pay that 10% costs anyway
So the market might move again, property would sell, people could remortgage, more money swilling around the economy and able to be spent on goods and services that do atteact collectable taxes
And less people would be unemployed so the governement would save some money on handing out benefits to out-of-work construction workers etc, because many of them would have some work finishing off projects and working on people´s properties that have been able to move etc or remortgage to renovate or extend
Do I think that the Spanish Government, having made a fortune from real estate taxes will do this ?
No. Of course they won´t.