Parental home-buying donations triple as Spanish housing tax burden hits 62% over a home’s lifetime

Donations from parents triple

The number of monetary gifts from parents to their children to help purchase a home has more than tripled since 2019, reaching over 62,000 transfers in 2025, according to data from the General Council of Notaries published by the Bank of Spain. The average gift stood at €87,161 last year, the lowest in recent years, suggesting the practice is spreading to a wider range of household incomes. In total, these transfers now move around €5.5 billion annually, equivalent to 0.3% of GDP.

The central bank notes that parental donations help young households overcome both the down-payment constraint and the income requirement, easing their access to mortgage credit.

These transfers would reduce both the necessary savings restriction and the income restriction, which would facilitate young people’s access to mortgage credit.

Tax take dwarfs public spending

While the state collects heavily from housing transactions, it returns very little in direct expenditure. In 2025, Spain gathered €52.2 billion in housing-linked taxes (6.9% of total tax revenue) but allocated only €7.614 billion to housing spending, just 0.48% of GDP. The purchase of a home carries a tax wedge of around 24% of the final price: 9.7% in direct buyer taxes and about 14.6% passed on from developer-side levies.

Housing could be called a use good, a wealth asset and a tax base for multiple levies.

Lifecycle fiscal pressure above 62%

A new study presented on 26 June by Fedea, the Cambra de la Propietat Urbana de Barcelona and the Confederation of Chambers of Urban Property identifies that the total tax burden on a property over its entire economic cycle, acquisition, holding and transmission, can exceed 62% of the original purchase price. The report, titled ‘Economic analysis of housing taxation in Spain’, finds at least 12 separate fiscal charges across income tax, VAT, wealth tax, transfer tax and inheritance and gift tax that inflate prices well beyond what experts consider reasonable.

Spain bears a very significant tax pressure, being one of the countries with the highest fiscal pressure on housing in Europe.

The study author, economist Jaume Menéndez, stresses that taxation alone does not explain the housing deficit, but it shapes prices, investment decisions and residential mobility. Fedea director Ángel de la Fuente pointed to supply-side bottlenecks: scarce finalist land, regulatory uncertainty, slow licensing, construction costs and low sector productivity.

Proposed reforms look to Portugal

Menéndez proposed a set of VAT reductions: a 0% rate for developers building homes for affordable rent, a temporary 0% rate for energy-efficiency and improvement works, and a reduced rate of 4–5% (down from the current 10%) for first home purchases, conditioned on income and age criteria. He cited Portugal’s May 2026 decree that cut construction VAT from 23% to 6% for homes sold below €660,000 and slashed tax on rental income from 25% to 10% for monthly rents below €2,300 as a model.

It is not about taxing less, but about taxing better.

In a roundtable, economist Valentí Pich, Joan Ràfols of the Barcelona Urban Property Chamber and Julián Salcedo of the Forum of Real Estate Economists underlined that Spain is the fourth OECD country with the highest housing tax burden.