Tax Policy Shifts in Spain: Andalusia Offers Incentives, Catalonia Cracks Down on Investors

Spain's autonomous regions are charting opposite courses in real estate taxation. While Andalusia introduces generous incentives to revitalize depopulated rural towns, Catalonia is preparing to impose stricter taxes on large investors in a bid for housing affordability and price control.

Andalusia: Tax Relief to Attract Rural Buyers

The Andalusian regional government has proposed a major reduction in property transfer tax (ITP/AJD)—from 8% to 3.5%—for homes purchased in municipalities with fewer than 3,000 residents. The measure covers 426 towns, mainly in Granada, Almería, and Málaga provinces. For a property priced at €150,000, buyers could save up to €6,750, a significant incentive, reports Spanish Property Insight.

Alongside this, child tax credits (including for adoptive or custodial parents) will double from €200 to €400 per year, paid through the personal income tax system (IRPF).

Andalusian Economy Minister Carolina España emphasized the region’s transformation from a “tax hell” to the second-most tax-attractive region in Spain. In 2024, 200,000 new taxpayers registered in Andalusia.

Experts note the success of this policy will depend on factors like housing availability, employment prospects, and quality of life in rural areas. Attention must also be paid to how effectively the incentives reach young families and low-income households—those most likely to settle long term.

Catalonia: Progressive Taxation to Combat "Real Estate Piracy"

The Catalan government, backed by the leftist Comuns party, has launched an extensive property tax reform aimed at curbing speculative activity. Authorities argue that bulk acquisitions by investors inflate prices and push locals out of the housing market, notes Spanish Property Insight.

Previously, a simplified two-tier system applied: 10% for properties under €1 million, 11% above.

The new scheme introduces four brackets:
- Up to €600,000 – 10%
- €600,000 to €900,000 – 11%
- €900,000 to €1.5M – 12%
- Above €1.5M – 13%

A 20% super-tax will apply to:

- Owners with more than five properties
- Investors purchasing entire residential buildings

In addition:

- Corporate tax exemptions for resale operations are revoked
- The tourist tax will double, with part of the revenue funding housing initiatives

However, tax relief remains for:
- Buyers under 32
- Low-income families
- Single parents
- Victims of gender-based violence (eligible for a reduced 5% rate on first-home purchases)

The reform is expected to generate an additional €300 million annually for Catalonia’s budget. Economy Minister Alícia Romero stressed the aim is to restore housing’s social function and curb speculative behavior. The proposal still requires approval by parliament and the Spanish president.

Two Visions, Two Strategies: Tax as a Housing Policy Tool

Andalusia and Catalonia offer polarized models of real estate taxation:
- Andalusia uses fiscal incentives to attract residents to rural towns and combat depopulation
- Catalonia pursues progressive taxation to rein in prices and restrict large-scale investors

These regional reforms reflect not only Spain’s decentralized housing policy, but also broader efforts to leverage tax tools for social and economic goals: increasing affordability, discouraging speculation, and revitalizing lagging regions.

Their success depends on the execution quality, adaptability to market reactions, and whether tax changes are supported by infrastructure, job creation, and social policy. For investors, this means:

- In Andalusia, rural towns may offer new opportunities in affordable housing—though with limited rental demand and uncertain capital gains
- In Catalonia, higher taxes will raise acquisition costs, especially for those with large portfolios—making accurate legal and financial planning essential