One of the alternative options for purchasing a house at a below-market price is buying through a cooperative. It is an option that offers tax breaks and saves nearly 20%. Therefore, this method is of interest to most young people when buying their first house.
According to the LACOOOP platform, two out of every three young buyers are currently choosing this method as an alternative to traditional buying, making it possible to purchase new houses at a more affordable price. The Confederation of Spanish Housing Cooperatives (CONCOVI) currently offers 2,700 housing cooperatives throughout Spain.
To allay any doubts about this option, the General Council of Official Associations of Real Estate Agents in Spain, in its study, talked about how housing cooperatives are created, what tax incentives they have and why the price of real estate, in this case, is more affordable.
As Lola Alcover, chief secretary of the COAPI General Council, explains, a cooperative is “a non-profit company that builds houses at cost.” It means that the developer company is not involved in the buying and selling process. In case of refusal from the company’s services, as Alcover informs, “housing becomes more affordable since the share of the company’s profit is excluded because the cooperative does not receive profit.”
With this configuration, housing cooperatives enjoy some tax benefits, such as a 20% corporate tax rate, a 95% reduction in business tax (IAE), and a transfer and stamp duty exemption (ITP-AJD).
In addition, according to the chief secretary of the General Council of Real Estate Agents, members of the cooperative “can get their financial contributions back on the house purchase by filing an income tax return.” All of these tax breaks, according to Alcover, make it an “interesting option to explore” when looking for housing.
How is a cooperative created?
Alcover notes that when the cooperative is created, the association of people acts as the builder of a house in such a way that “a member of the cooperative is both a developer and a tender winner for the acquisition of real estate.”
Thus, real estate is built by a non-profit association of people who must participate in meetings and have the right to make decisions jointly. Therefore, cooperative housing is a new construction format and a housing type that is becoming increasingly in demand in the fight against the pandemic era.
In creating this format, each autonomous community establishes its cooperative system. However, the common thing is that a General Assembly, a Board of Governors, and an Auditor should be formed in each case.