The State takes €43,000 from a €180,000 property sale

The State takes €43,000 from a €180,000 sale: the real property speculator

You sell a flat for 180,000 euros. The State pockets 43,000 in taxes. You, after renovations and years of work, are left with 20,000 in profit. The figures have been laid out by an investor who renovates properties, and the breakdown invites the question of who is really speculating.

The tax antiestéticast of every sale

For every transaction, Spain's tax agency takes several bites. The buyer pays the ITP (property transfer tax, between 6% and 10% of the value), which on a €180,000 home means between 10,800 and 18,000 euros. Then there is the plusvalía municipal, a local tax on the increase in land value — a revaluation the State artificially generates by restricting land. And the seller pays capital gains tax in the IRPF (Spanish income tax) at roughly 25%. Adding it all up, it has been calculated that a third of the final price of a new-build home is taxes.

The perverse incentive: the higher the price, the higher the revenue

If the tax agency wanted housing prices to fall, it could do so tomorrow with a regulatory change. But it doesn't. The reason is obvious: the State is the first to benefit from soaring prices, because its revenue grows in parallel. Between the ITP, the IRPF and the plusvalía, the taxman takes the lion's share of every transaction. As one analysis puts it: "The housing situation in Spain is a design, not a problem." And as long as investors keep turning up willing to pay, the model works wonderfully for the public purse.

The unsettling figure: the individual investor, bearing all the risk of the renovation and the uncertainty of the market, takes in 20,000 euros. The State, without lifting a finger, takes in 43,000. You don't need to be a mathematician to see who comes out ahead.