A couple of commentors wanted to know (and with good reason, given the inadequate presentation) how two years of tax advantage is going to goose the Spanish housing market.It's like this...
Those that currently enjoy the tax deductions that accompany home ownership, or avail themselves of them in the next 19 months, will continue to do so into the foreseeable future - with all the appropriate caveats. Those that do not get in under wire will not.
The measure should accomplish two objectives.
The first is to generate activity from the higher income brackets (those with complex situations that use accountants to calculate their taxes). This is a group of serious hoarders in the current environment.
The second is that the combination of the cancellation of the tax break plus the possibility that a price bottom will be put in in its wake will bring out the hedgers - the interested and financially able who might see the risk of future price increases, and the certainty of higher taxes, as outweighing the rewards to be had from continued adherence to the deflation strategy. In Spain, with its religiously held belief in the desirability of home ownership, the participation of this group is crucial.
Do we think this is a viable long term solution to anything? Umm, no. Then again, one doesn't consult with an architect to solve the immediate problem of a stampede for too few exits from the reader's favourite stadium.
Our apologies for yesterday's too-quick treatment. Something about ruminants making lousy hunters.
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