Among the provisions included in the Royal Decree on urgent measures for economic and social deficit correction, approved by the Executive on December 30 (2011), highlights the recovery in income tax relief for the acquisition of a first residence, with a view to reviving the housing market and easing the unsold “housing stock”, estimated at about 700,000 properties. The Government also agreed not to renew the 210 euros rent allowance for young people between 22 and 30 years.
The personal income tax rebate for the purchase of a principal residence is maintained under the same conditions that existed until December 31, 2010, investment of 15% allowed in a first home purchase, up to a limit of 9,015 euros, which translates into savings for buyers of up to 1,350 euros. Currently, the deduction can only be applied for by those earning less than 24,000 euros. This measure will apply retroactively from January 2011.
The new Royal Decree also includes the establishment of a super-reduced VAT of 4% for the first home purchase from 2012 (which has currently been in place as a temporary measure since August 2011 and was subject to being extended as, if and when the Spanish PP political party win the recent general elections, which they did with an overall majority). This measure is intended to help the housing market recovery, as noted by the Executive. On the other hand, it establishes an increase in Property Tax (IBI) that affects homes that are above the average price. This latter provision shall be temporary for two years.
