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

PERSONAL INCOME TAX (IRPF)

  1. Reduction for housing rentals for leases signed from January 1, 2024

    Section 2 of article 23 of Law 35/2006, of November 28, on Personal Income Tax (LIRPF) is amended by Section One of the Second Final Provision of Law 12/2023, of May 24, on the right to housing.

    The current reduction of 60% for rentals intended for habitual residence is modified, establishing that the positive net income will be reduced:

    1. In 90% of cases, when the same landlord has signed a new lease agreement for a property located in areas with a stressed residential market, with a reduction in rent of at least 5% compared to the previous agreement.

    2. In 70% when, not meeting the requirements of the previous letter, it is a question of the incorporation into the market of housing intended for rent in areas with a tense residential market and is rented to young people between 18 and 35 years of age in said areas, or, it is a question of affordable housing that is incentivized or protected, rented to the public administration or third sector entities or the social economy that have the status of non-profit entities, or covered by a public housing program that limits the rental income.

    3. 60% when, not meeting the requirements of the previous letters, the home has been subject to a rehabilitation project that has been completed in the two years prior to the date of the contract.

    4. By 50% in any other case.

    The stated requirements must be met at the time of signing the lease agreement and the reduction will be applicable as long as they continue to be met.

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

    These reductions will not apply in relation to lease contracts that fail to comply with the provisions of section 6 of article 17 of the Urban Leasing Act.

  2. Reduction for housing rentals for leases signed before May 26, 2023.

    A thirty-eighth transitional provision is introduced in the LIRPF by Section Two of the Second Final Provision of Law 12/2023, of May 24, for the right to housing,

    The positive net returns on real estate capital derived from housing lease contracts that had been entered into prior to the entry into force of Law 12/2023, of May 24, on the right to housing, will be subject to the reduction provided for in section 2 of article 23 of this law in its version in force as of December 31, 2021. Therefore, the 60% reduction in force until 31/12/2023 will continue to apply in 2024.

  3. Reduction for housing rentals for lease contracts signed from May 26, 2023 to December 31, 2023.

    Pursuant to the provisions of the second and ninth final provisions of Law 12/2023, of May 24, on the right to housing, leases for housing purposes will apply:

    During 2023, the 60% reduction provided for in section 2 of article 23 of the Tax Law, as valid until 31/12/2023.

    As of January 1, 2024, the reduction of 90, 70, 60 or 50% that is appropriate depending on the circumstances - indicated above - that occur in the contract, in accordance with the current wording of section 2 of article 23 of the Tax Law as of that date.