If you are considering supportive, participatory options when buying a home, a housing cooperative may be just what you are looking for. In addition to social and community benefits, members of cooperatives can also save on taxes. We will explain some of these tax advantages in this post so you can make an informed decision.
Tax deductions on Income Tax (Spanish “IRPF”)
Members of a housing cooperative can benefit from Income Tax deductions. Some Spanish regions apply reductions in your tax base while others provide direct tax deductions, bringing down the tax payable on your yearly tax return.
Reduced VAT on housing purchases
By buying a home through a cooperative, you can benefit from a reduced VAT rate. This reduced rate is usually lower than the general VAT applied in the real estate market, which means a significant saving on the initial investment.
Exemption from the Tax on the Increase in Value of Urban Land (municipal capital gains tax)
When you buy a home through a cooperative, you may be exempt from the so-called municipal capital gains tax. This exemption would lighten your financial burden, since you would not have to pay this tax when purchasing a home.
Access to the Special VAT System
Housing cooperatives can benefit from the Special VAT System, which is more favourable than other forms of property development taxation. This would reduce the tax burden during the construction and sale of homes, benefiting both the cooperative and its members.
It is important to keep in mind that tax advantages may vary according to the legislation in force and the Spanish region in which the cooperative is located. Therefore, it is advisable to consult a specialised tax advisor to obtain updated and personalised information about the specific tax advantages that apply to your situation.
In short, belonging to a housing cooperative in Spain not only gives you the opportunity to be part of a supportive community but also entails considerable tax advantages. From Income Tax deductions to reduced VAT rates and municipal tax exemptions, your tax bill will be lower throughout the home acquisition process.
Discover Hyggecoop’s housing cooperative options and pay less tax on the home of your dreams!
