Renting out your home and income tax: deductions and the 50% to 90% reduction
How rental income from housing is taxed in Spain, which expenses are deductible and when each reduction applies since the 2023 Housing Act.
1 min read
If you let a home, the income is declared on your tax return as income from real estate capital. The good news is that you are not taxed on everything you receive.
What can be deducted
From annual rent you can subtract, among other things:
- Mortgage interest, within limits.
- Property tax, community fees and insurance.
- Repairs and upkeep.
- Depreciation, generally 3% of the higher of cost and cadastral value, excluding land.
Keep invoices and receipts. Improvement works are not treated the same as repairs.
Reductions on net income
For housing contracts signed from 26 May 2023, article 23 of the Income Tax Act provides a general 50%, which can rise:
- To 90% if the rent is cut by at least 5% in a stressed zone, meeting the conditions.
- To 70% when letting for the first time to young people in a stressed zone, or for incentivised affordable housing.
- To 60% after refurbishment.
Earlier contracts may keep their previous regime. Check with your adviser.
What it does not cover
The general reduction is meant for a tenant's main home. Tourist and seasonal lets are taxed differently, and if you provide hotel-type services, VAT may apply.
In practice
Declare all income and do the calculation properly: the tax agency cross-checks data. If you are non-resident, the rules change.
