In Spain, according to INE data, there are 3.8 million empty homes, which is 14% of the total. In cities like Madrid and Barcelona, the percentage of empty homes reaches 6.3% and 9.3%. The empty homes tax has emerged as a measure to combat the existence of all these unoccupied flats and to address the high demand for housing.
In various autonomous communities, a surcharge on the Property Tax (IBI) has been implemented for properties that remain unoccupied for long periods. In this article, we analyze what this tax consists of, where it applies, who it affects, and what its implications are.
What is the empty homes tax?
The empty homes tax is, in fact, a surcharge that is applied to the IBI for residential properties that are not being used or rented out for a certain period.
The surcharge can reach up to 150% and its main objective is to encourage owners to put the homes to use, either through sale or rental, thus increasing the available supply in the real estate market and reducing prices.
What is IBI (Property Tax)?
The Property Tax (IBI) is a municipal tax that levies on the ownership of real estate, both urban and rural. It is one of the main sources of funding for municipalities and is calculated based on the cadastral value of the property.
The surcharge for empty homes is integrated within the IBI and increases the total amount to be paid by owners of unoccupied homes. This surcharge can vary according to the legislation of each autonomous community and the specific regulations of the municipalities.
Empty homes tax in Catalonia
In Catalonia, this tax has been established and includes the following elements:
- Taxable event. It is constituted by the unoccupancy of a home for a period of more than two years without justified cause.
- Taxpayer. The following are subject to it:
- – Legal entities owning empty homes.
- – Legal entities holding a usufruct, surface right, or another real right that grants the power to economically exploit the home.
- – Titling funds.
- – Individuals considered large holders. That is, those who have a real right over more than 15 homes, allowing them to economically exploit the property.
- Exemptions. The following cases are exempt:
- – Social insertion homes.
- – Protected homes.
- – Homes located in low-demand areas.
- – Social rental homes.
- – Tourist homes.
What is considered an empty home?
For a home to be considered empty and the surcharge to apply, it must remain uninhabited for a period ranging from one to two years, depending on the regulations of each autonomous community. During that time, the home must remain unoccupied and not be used as a primary or secondary residence.
There are several exceptions where a home can be unoccupied without being subject to the surcharge. These are:
- – Homes in the process of being sold or rented.
- – Properties undergoing rehabilitation works.
- – Properties unoccupied due to force majeure, such as natural disasters or structural problems.
Owners are obliged to notify the competent authorities about the occupancy status of their properties and, if applicable, pay the corresponding surcharge.
What effects does the tax have on the real estate market?
The approval and implementation of the so-called empty homes tax have several effects on the residential market, among which we highlight the following:
Impact on housing supply and demand
The IBI surcharge is expected to increase the housing supply in the market because it encourages owners to rent or sell their empty properties. This can help balance supply and demand, especially in areas with high housing demand like major cities. In principle, the existence of a greater supply could lead to a reduction in rental and sale prices, facilitating access to housing.
Economic consequences for owners and investors
For owners and investors, the IBI surcharge can represent a fairly high additional cost. It could also deter some investors from acquiring real estate in areas where this tax applies, thus potentially reducing investment.
Reduction of real estate speculation
The implementation of the empty homes tax can help reduce real estate speculation. Investors who buy properties intending to leave them empty while waiting for their value to increase might be deterred by the IBI surcharges.
Improvement in the occupancy and maintenance of homes
Empty homes often deteriorate faster than occupied ones due to lack of use and regular maintenance. The IBI surcharge can contribute to better preservation of the residential stock by increasing occupancy.
Impact on social housing policies
The increase in the available housing supply could facilitate the implementation of social housing policies. Local governments might have more options to negotiate the acquisition or rental of homes for social programs.
Increase in fiscal revenue for municipalities
The IBI surcharge provides an additional source of income for municipalities, which can use these funds to improve public services, invest in infrastructure, and develop housing programs.
Advantages and disadvantages of the empty homes tax
Based on all the above, we see some advantages and disadvantages of the IBI surcharge, which are as follows:
- – Increase in the supply of homes available for sale and rent.
- – Reduction in prices due to the increase in supply.
- – Disincentive for speculative buying.
- – Increase in municipal revenues.
Regarding the disadvantages, the following stand out:
- – Increase in costs and expenses for owners, especially for those who own multiple properties.
- – Possible lack of interest from investors.
- – Difficulty in identifying empty homes.
Recommendations for owners
If you own an empty home in an area where the IBI surcharge applies, you have several options:
- Rent the home. Analyze the rental market in your city, set a price, and publish the offer on a real estate portal or collaborate with experts in the sector to help you find tenants.
- Sell the property. Consider selling the home if you do not foresee using it in the short or medium term.
- Alternative use. Converting the home into a vacation residence or temporary accommodation can be another option to keep it occupied. You can also analyze the possibility of using it or renting it out, if the regulations allow, as an office or coworking space.
As we have seen, the empty homes tax aims to combat speculation and increase the supply of homes in the market. If you want to rent or sell your empty home to achieve profitability and avoid the additional costs of the surcharge, contact us and we will help you.
