New Tax Relief for Rentals
17.12.2025
The Government has proposed reducing the IRS (Personal Income Tax) rate on rental income from 25% down to 10%. This measure aims to benefit owners of both new and existing contracts.
What is changing and who is covered?
The standout feature of this proposal is its broad scope. Unlike previous regimes focused solely on long-term leases, this 10% tax reduction will apply to:
- Moderate Rents: A maximum limit set at €2,300 per month.
- Short-Term Rentals: Includes contracts for non-permanent housing or "special transitional purposes" (professional, students, or training).
- Tourist Rentals: Includes contracts for tourism purposes, provided they are carried out only once a year by the same landlord.
The Importance of Transitional Contracts
The Ministry of Infrastructure and Housing clarified that the measure protects transitional situations, such as displaced teachers or individuals undergoing medical treatment. However, it is essential that the reason for the transition is clearly identified in the contract to benefit from this tax relief.
Simplified Affordable Rental Regime (RSAA)
In parallel, the new affordable rental regime offers a total IRS exemption if the rent is 20% below market value. For temporary purposes, this regime requires:
- A minimum term of 3 months.
- The tenant must have their tax residence in a different municipality from the property.
- For permanent housing, the contract must have a minimum duration of 3 years.
Important Note: This proposal is part of the Government’s fiscal package and is currently awaiting final approval in Parliament to come into effect.
At The Magnolia Properties, we closely monitor these changes to ensure our clients maximize their assets safely and efficiently.
Source: Idealista
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