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B Law & Tax
03 May 2023

Tax advisor: Tax compensation for landlords who reduce the rent of their apartment by more than 5%.

The current text of the Housing Law sets a ceiling on rental prices and reduces from ten to five the number of properties needed to be considered a large owner. In addition, tax incentives for landlords are incorporated: in the case of rentals of regular housing in stressed areas, the reduction in Personal Income Tax for the net yield will be increased from 60% to 90% if the landlord reduces the rental price by 5% or more compared to the previous contract.

The owner will be able to compensate the loss of income by reducing the rental price with the tax savings he will obtain. The REAF estimates that, if a single owner under 65 years of age and without children with a gross income of 60,000 euros rents his apartment for 1,000 euros per month and reduces the price by 6%, going on to earn 11,280 euros per year instead of 12,000 euros, he will obtain a saving in the IRPF of 1,240 euros. For an owner with gross earned income from working of 26,000 euros, the saving in the declaration will be 1,005 euros, while, for the landlord with income from work of 18,000 euros, the saving will be 795.55 euros. These three cases refer to a home whose purchase price was 300,000 euros. In addition, a tax relief of up to 70% will be applied in the IRPF for the rental of habitual residence when owners introduce new properties on the market in tense areas and rent them to young people between 18 and 35 years old.

To sum up, if the owner reduces the rent by more than 5%, the reduction in Personal Income Tax can be up to 90%, as long as the property is located in a stressed area. The new law of tax incentives in the Personal Income Tax for rental housing establishes that the reductions vary according to the type of property and tenant. In the case of new rentals destined to young people between 18 and 35 years of age or to non-profit entities that provide housing to vulnerable people, the tax relief is 70%. For homes rehabilitated in the previous two years, the reduction is 60%. The purpose of all these tax advantages is to stimulate the rental of permanent housing at affordable prices.

B Law & Tax International Tax & Legal Advisors.


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