Welcome once again to the WIT Andorra blog! On this occasion, we will address recent tax updates that significantly affect real estate investors and owners in Andorra. In addition, we will detail the real estate taxes in Andorra on real estate and the introduction of the innovative Tax on Foreign Investment in Real Estate (IIEI).
Advances in real estate taxation in Andorra
Andorra has recently modified its real estate tax regime, adjusting the taxes on capital gains and rental income. These changes are designed to promote efficient management of the real estate stock and attract foreign investment, thus ensuring an equitable contribution to local economic growth.
Capital Gains Tax
As of 2024, the capital gains tax has been adjusted. For properties held less than two years, the tax rate is 15%. This rate decreases progressively to 0% for properties held for more than ten years, encouraging long-term investment in the Andorran real estate market.
Leasehold Income Tax Reductions
Additionally, a 5% reduction has been implemented on income from the rental of housing that serves as a habitual residence, as long as the rent does not exceed 8 euros per square meter, with a limit of 1,250 euros per month. This measure seeks to facilitate access to affordable housing for residents and actively promote the rental market in the country.
New Tax on Foreign Investment in Real Estate (IIEI)
The IIEI, or real estate tax in Andorra, is a new tax measure aimed at regulating and taxing foreign direct investment in the real estate sector in Andorra. in the real estate sector in Andorra. Below, we explore the most relevant aspects of this tax:
- Taxpayers: The tax applies to non-resident individuals, residents with less than three years of stay in Andorra, and both foreign and Andorran entities with significant foreign participation.
- Progressive tax rate: The tax starts at 3% for the first real estate unit acquired, increasing to 10% depending on the number of properties owned.
- Exemptions and bonuses: Rebates of 90% are granted to investors who lease their properties under specific conditions, such as holding the leased property for a minimum of ten years.
How can WIT Andorra assist you?
At WIT Andorrawe are fully prepared to assist you in understanding and adapting to real estate taxes in Andorra. We offer personalized advice to optimize your investment portfolio and real estate strategies in accordance with the latest regulations. If you want to maximize the return on your real estate investments and ensure regulatory compliance, contact us without hesitation.
