B Law & Tax
15 March 2024


As from January 1, 2024, a modification is introduced in Article 23.2 of Law 35/2006, of November 28, on Personal Income Tax (IRPF), relating to the reduction applicable to the positive net yield obtained from the leasing of real estate used for housing.

Firstly, the current variation from 60% to 50% for new rental contracts. However, this reduction percentage can be increased to 90% under certain conditions:

  • The reduction will reach 90% if the same lessor enters into a new lease on a property located in a stressed residential area, reducing the initial rent by more than 5% with respect to the last rent of the previous lease, after applying, if applicable, the annual updating clause of the previous lease.
  • The reduction will be 70% in the following cases:
  • When renting the dwelling for the first time, located in a stressed residential area, and when the lessee is between 18 and 35 years old.
  • When the lessee is a Public Administration or non-profit entity, allocating the housing to social rent with a monthly rent lower than that established in the rental aid program of the state housing plan, or to the housing of persons in a situation of economic vulnerability, or if the housing is included in any public housing program or qualification that limits the rental income as established by the competent Administration.
  • The reduction will be 60% in the event that the dwelling has undergone a rehabilitation completed in the two years prior to the date of execution of the lease contract.
  • In all other cases, the reduction will be 50%.

It is important to take into account that these new reduction percentages will be valid for positive net income from real estate capital derived from lease contracts signed after the entry into force of the regulatory modification (01-01-2024 or later). On the other hand, income derived from lease contracts signed before January 1, 2024 will continue to apply the 60% reduction established in Article 23.2 of the LIRPF in its current wording as of December 31, 2021 (modified by Law 11/2021, of July 9), according to the provisions of the new thirty-eighth transitory provision incorporated into the LIRPF.

Finally, in order to be able to apply the aforementioned reduction, it is still a requirement that the positive net income has been determined by the taxpayer in a self-assessment filed prior to the opening of a data verification, limited verification or inspection procedure that includes in its object the verification of such income.

B Law & Tax International Tax & Legal Advisors.


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