Spain cuts VAT on new homes

Spain unveiled a raft of austerity measures on Friday (August 19th) to help its ailing economy and among them were proposals to reduce the amount of value added tax (VAT) levied on new home purchases.

People looking for a property in Spain may decide that it is a good time to buy, with VAT on transactions for new-build houses and apartments set to fall to four per cent - half its normal level - from now until December 31st this year.

Government spokesman Jose Blanco explained in a statement that it is hoped the measure will help reduce the amount of unsold stock in the country.

House prices in Spain have been steadily falling, with the latest General Spanish Real Estate Market Index revealing a 6.4 per cent year-on-year decline in July.

According to the research, locations on the Mediterranean coast experienced the biggest falls of 9.5 per cent, while the Balearic and Canary Islands saw their property markets hold up relatively well, with values dropping by just 2.5 per cent in the same period.

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