Main tax changes introduced by Act 12/2023, of 24 May, on the right to housing

PERSONAL INCOME TAX (IRPF)

1. Reduction for the rental of a home for the lease agreements concluded from 1 January 2024

   Section 2 of article 23 of Act 35/2006, of 28 November, on Income Tax for individuals (LIRPF) by section One of the second Final Provision of Act 12/2023, of 24 May, on the right to housing.

   The current reduction of 60% is modulated, establishing that the positive net yield will be reduced:

   1. 90% When a new lease contract has been signed by the same lessor on a property in residential areas with a reduction in the rent of at least 5% of the previous contract.

   2. 70% When, if the requirements of the previous letter are not met, it is the incorporation of homes into the market for rent in residential market areas with a tensioned lease of hire for young people between 18 and 35 years old in these areas, or try an affordable, incentivised or protected property, leased to the public administration or third sector entities or the social economy that have the condition of non-profit organisations, or welcome to a public housing programme that limits rent.

   3. 60% When, if the requirements of the above letters are not met, the property was subject to a renovation action that had been completed in the two years prior to the date of the contract.

   4. In any other case, 50%.

   The requirements indicated must be met at the time of the lease agreement and the reduction shall be applicable until they are fulfilled.

   The residential market areas that are in the market will be those included in the resolution that, in accordance with the provisions of the state legislation on housing, approves the Ministry of Transport, Mobility and Urban Agenda.

   These reductions will not be applicable in relation to lease contracts that do not comply with the provisions of article 6 (17) of the Urban Leases Act.

2. Reduction for leasing of a home for lease contracts concluded before 1 January 2024

   A transitional provision is introduced in Section Two of the second Final Provision of Act 12/2023, of 24 May, on the right to housing,

   To the net positive returns on real estate capital derived from property lease contracts that had been concluded before the entry into force of the reduction provided for in section 12 2023 24 2 of article 23 of this law in its current wording at 31 December 2021.