Spain's rental tax relief drops from 60% to 50%

Rental Income Tax Relief Drops: From 60% to 50% in 2024

A landlord earning €26,000 annually with a market-rate apartment faces a slightly higher tax bill: over €240 per year in IRPF (personal income tax) for the same contract. The cause is a single provision of Spain’s Housing Law that reduces the deduction on rental income from 60% to 50%. It was not a widely publicized fiscal reform; it slipped in quietly, and now the Spanish Tax Agency has set its effective date.

It is one of those measures that cost little per payslip but add up significantly overall. The detail, and the controversy, lies in who is affected.

What Exactly Changes in Rental Income Tax

Until now, owners renting out apartments as tenants’ primary residence could apply a 60% reduction on income declared as real estate capital gains. From 2024, this percentage drops to 50% for contracts signed after January 1.

The uncertainty lingered for months: neither the Government nor the Tax Agency initially clarified whether the change applied to existing contracts or only new ones. The confusion was resolved when the Spanish Tax Agency specified that it affects all contracts signed from January 1, 2024.

The Executive has presented this as an “improvement in IRPF regulation,” bundling it with reductions of up to 90% for those who lower rents or target young tenants. In short: those charging market rates pay more, though the official narrative avoids stating it plainly.

How Much More Do You Pay With a €26,000 Salary?

The example used in published data is modest yet significant: a landlord earning around €26,000 annually who rents at market price adds more than €240 per year to their IRPF bill. No large estates, no intermediary companies. Just the small landlord, the one with a single apartment rather than a portfolio.

Counter-arguments circulate claiming rental IRPF was already lenient. Figures cite €100,000 annual rental income declared with a net profit of €30,000 and, applying the previous half-reduction, €12,000 taxable. Depreciation, deductible expenses, and limited oversight are cited. This claim lacks documentary backing and should be treated as such, but it explains why some do not view this increase as catastrophic.

Can the Increase Be Passed On to Tenants?

This is where true disagreement begins. Some analysts argue clearly: raising taxes on landlords does not miccionan they bear the cost; it is paid through the tenant’s monthly rent. If margins shrink, prices adjust, and it is unsurprising that the first move is to offset what the Tax Agency takes away.

Opposing views suggest that the less profitable it is to own a rented apartment, the more owners will withdraw properties from the market. And less supply, with constant demand, does not usually lead to lower prices. This reasoning suggests the measure will not make housing cheaper: it may reduce interest in renting, but not necessarily lower the rent someone pays each month.

Price Caps: The Battle Over Tensioned Zones

The legal framework allows limiting prices in so-called tensioned zones, and here the dispute is numerical, not merely opinion-based. Some argue that rent regulation applied in Barcelona—which was briefly in force before being suspended by the Constitutional Court—coincided with falling prices and increased supply. The opposing view claims the opposite: that apartments above the cap left the market, cheap units rose to the cap, and supply collapsed.

Even studies disagree on the underlying facts, partly due to methodological issues: the regulation was active during the pandemic, when prices moved for many other reasons. Based on this, conclusions cited by both sides have weak evidentiary value.

Meanwhile, another forecast circulates: a surcharge of up to 150% on IBI (property tax) for vacant homes. This is a predicted scenario, not a done deal.

Short-Term Rentals Under Scrutiny

The second piece targets seasonal rentals. The Ministry of Housing has formed a working group to regulate this modality, increasingly used to bypass limits on long-term residential and tourist rentals. The suspicion, from the other side, is familiar: if long-term renting becomes inconvenient, owners will seek formulas offering more flexibility. Students, short stays, seasonal contracts, or simply keeping the apartment closed.

With this comes a consequence some state bluntly: renting only to low-risk profiles, accepting cash payments, or not renting at all. Fewer apartments on the market without making any cheaper.

With relief dropping from 60% to 50% and a typical adjustment of €240, the tax hike is almost symbolic. The problem for tenants is that percentages do not sign contracts: people do. Owners, with the same apartment, increasingly calculate that withdrawing it from the market yields similar results.