What income tax allowance do I get for letting my flat?

Question

José Manuel Alburquerque · Accepted Answer

It depends on the date of the contract. If it was signed on or after 26 May 2023, you can generally deduct 50 % of the net income from the letting, which is what you received in the year less the expenses of the flat. In some cases the allowance rises to 60 %, 70 % or 90 %. If the contract was signed earlier, it is 60 %. It only applies to lettings as the tenant's home and it is lost, among other cases, if the flat is in a stressed residential market area (“zona tensionada”) and the rent exceeds the cap set by law. Today's percentages For contracts signed on or after 26 May 2023, the allowance is as follows: 90 % if you sign a new contract for a flat in a stressed residential market area with an initial rent more than 5 % below the last rent under the previous contract for that flat, once updated. 70 % if you are letting the flat for the first time, it is in a stressed residential market area and the tenant is between 18 and 35 years old. If there are several tenants, only for the share of those who are that age. Also if the tenant is a public authority or a non-profit organisation that uses it for social rent, or if the flat is in a public scheme that caps the rent. 60 % if the flat was refurbished, in the sense given to that word by the regulations governing the “IRPF”, Spain's personal income tax, in the two years before the contract. 50 % in all other cases. Stressed residential market areas, declared as such because of their high rents, are those on the Ministry of Housing's list. In Catalonia they include Barcelona and many other municipalities. The requirements are assessed when the contract is signed and the allowance lasts for as long as they continue to be met. For contracts signed before 26 May 2023, the allowance is 60 %, including during their extensions. If you sign a new contract, even with the same tenant, the prudent course is to count on today's percentages. If the October 2026 decree is ratified by Parliament (“convalidación”), that is, if the “Congreso”, the lower house, confirms it, residential tenancies of a main home signed on or after 1 December 2026 will have a different scale, from 15 % to 100 %, which will depend mainly on how much the rent falls or rises compared with the previous contract. Under the decree, contracts of any date whose five-year minimum term ends after 1 December 2026 will also have an 80 % allowance during the extension that follows if nobody gives notice of not wishing to renew, in principle provided that you are not a large-scale landlord (“gran tenedor”). When there is no allowance If the flat is in a stressed residential market area and the initial rent exceeds the legal cap, which is generally the last rent under a tenancy agreement for that flat in the previous five years, updated. That contract loses the whole allowance. For holiday lets and seasonal lets. For temporary residential tenancies signed since 8 October 2026 there is still no position from the tax authorities, so the prudent course is not to count on it. If the tenant is a company, unless the contract states from the outset who is going to live in the flat and that it is only for that person. It is not enough for it to be for the company's employees. If the letting produces a negative result, because there is nothing to reduce. On anything the tax authorities correct. The allowance only applies to what you declare before the tax authorities begin checking it. If they discover income you did not declare or expenses you were not entitled to deduct, that part is taxed in full.