In Catalonia, as from 27th June 2025 a new 20% rate of Property Transfer Tax (ITP) for major property holders purchasing homes or entire buildings applies. This measure is part of the new Catalan Tax Code, specifically Article 641-1, and aims to curb real estate speculation amid continuously rising prices, especially in areas declared as tensioned markets.

Who does the new tax affect?

The regulation directly targets so called major property holders, those individuals or legal entities owning more than 10 residential properties in Catalonia or more than 1,500 m² of building area designated for housing. In municipalities classified as tensioned zones, such as Barcelona and over 270 others, this is lowered to 5 properties.

It also applies to those acquiring entire buildings consisting of two or more dwellings, even if there is no horizontal division with regard to property ownership. Single-family homes are excluded from this definition.

Key exceptions:

Although the new 20% tax aims to limit speculation, the law includes important exceptions to avoid unjustified impacts on cases that do not fit that profile.

Those not considered major property holders:

  • Those who only hold usufruct or habitation rights.
  • Individuals whose primary residence is their only property; this does not count towards the threshold.

Exemption for family use:

  • If an individual buys a building with up to 4 homes and their own family or close family members (relatives up to the second-degree of kinship) use it as their primary residence, with all of them living there for at least 3 years, the 20% tax will not apply.

Also exempt are:

  • Social housing developers.
  • Non-profit organizations.
  • Purchases intended for the buyer’s corporate headquarters or workplaces.

Consolidation of ownership:

  • If someone acquires full ownership by onerous title (for example, inheriting the property after a usufructuary’s death) and qualifies as a major property holder at that time, they must apply the 20% tax upon consolidation.

General ITP increases in Catalonia

The new tax does not only affect major property holders. The general ITP rate has also been revised for other buyers, establishing a progressive scale based on the property value:

  • Up to €600,000: 10%
  • Between €600,000 and €900,000: 11%
  • Between €900,000 and €1.5 million: 12%
  • Above €1.5 million: 13%

As a result, many sales transactions, even those not linked to funds or large investors, will face increased costs.

For example, a €700,000 home will now be taxed at a rate of 11% instead of 10%.

Impact on the rental market

Although the Catalan government’s intention is to curb speculation and contain prices, various experts and real estate associations have warned of possible adverse effects.

By taxing property acquisitions more heavily, investment in rental housing could be discouraged, reducing supply and driving rental prices even higher.

The Association of Rental Property Owners (ASVAL) points out that this is a “highly punitive” measure that may lead to a reduction of legal rental offerings, just when Catalonia faces a serious shortage of affordable housing.

The regulation is also criticised because it does not differentiate between professional property managers and speculators, applying only a quantitative criterion, which penalizes small landlords and families who manage their properties.

Possible violation of tax justice principles

The 20% tax rate has raised questions as to whether the new rate is constitutional. Article 31 of the Spanish Constitution states that everyone must contribute to public expenses according to their economic capacity through a tax system that is fair, progressive, and not confiscatory.

Applying a high flat rate without distinguishing the final use of the property—such as social rental housing or primary residence—could be considered disproportionate.

Other changes in the decree

Beyond the major property holder tax, the decree also includes some favourable measures:

  • The age limit to qualify for the reduced 5% rate on primary residence purchases is extended to 35 years.
  • This benefit now also applies to victims of gender-based violence.

With this new regulation, Catalonia positions itself at the forefront of real estate taxation. While the Catalan government defends the measure as a tool to prevent housing accumulation and contain prices, the sector warns it could backfire, reducing supply and harming rental investment.

Only time and the practical application of the new tax rates will reveal whether this fiscal move meets its goals or needs adjustment to balance effectiveness and tax fairness.

 

 

Kengo Matsuoka

Vilá Abogados

 

For more information, please contact:

va@vila.es

 

25th July 2025