Spain's housing taxes and new rent-control measures strain buyers and renters

Housing affordability has become a major issue in Spain, with the CIS poll identifying it as the country's leading social worry. In response, the government introduced two decrees that limit rent levels, prolong tenancy agreements for up to two years or indefinitely, and impose restrictions on room rentals and tourist accommodations. It is also considering interest-free loans for young first-time buyers.

The tax burden on property spans the entire transaction chain: new homes incur a 10% VAT and the AJD tax, while resale properties face a 6%-10% ITP set by autonomous communities. Additional costs include local property taxes like IBI, income-tax imputation for second homes, municipal capital gains, and VAT on utilities such as electricity and water. These layered taxes generate substantial revenue for public finances while deepening the affordability challenge.