Main tax innovations introduced by Law 12/2023, of May 24, for the right to housing
PERSONAL INCOME TAX (IRPF)
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Home rental reduction for lease contracts entered into since January 1, 2024
Section 2 of article 23 of Law 35/2006, of November 28, on the Personal Income Tax (LIRPF) is modified by section One of the second Final Provision of Law 12/2023, of 24 of May, for the right to housing.
The current reduction for rentals for primary residences of 60% is modified, establishing that the positive net return will be reduced:
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90% when a new lease contract has been formalized by the same landlord for a home located in areas with a stressed residential market, with a reduction in rent of at least 5% over the previous contract.
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70% when, not meeting the requirements of the previous letter, it involves the incorporation into the market of housing intended for rent in areas with a stressed residential market and it is rented to young people between 18 and 35 years old in said areas, or , whether it is incentivized or protected affordable housing, leased to the public administration or third sector or social economy entities that have the status of non-profit entities, or covered by a public housing program that limits rental income.
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In 60% when, the requirements of the previous letters were not met, the home had been the subject of a rehabilitation action that had been completed in the two years prior to the date of execution of the contract.
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By 50% in any other case.
The indicated requirements must be met at the time of entering into the lease contract and the reduction will be applicable as long as they continue to be met.
The stressed residential market areas will be those included in the resolution that, in accordance with the provisions of the state legislation on housing, is approved by the Ministry of Transport, Mobility and Urban Agenda.
These reductions will not be applicable in relation to lease contracts that fail to comply with the provisions of section 6 of article 17 of the Urban Leases Law.
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Reduction for housing leases for lease contracts entered into prior to 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 were 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 current wording as of December 31, 2021. Therefore, the 60% reduction in force until 12/31/2023 will continue to apply in 2024.
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Reduction for housing leases for lease contracts entered into from May 26, 2023 to December 31, 2023.
By virtue of the provisions of the second and ninth final provisions of Law 12/2023, of May 24, for the right to housing, leases intended for housing will apply:
During 2023, the 60% reduction provided for in section 2 of article 23 of the Tax Law, in its wording in force until 12/31/2023.
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 said date.