The New Changes in the Spanish Housing Law for 2024

Beginning on January 1, 2024, the Spanish tax reform of rental properties will be in effect.

The housing law in Spain has been revised and will implement several tax benefits for landlords. This new housing act in Spain aims to lower rising rental costs, support economically disadvantaged families, and provide affordable houses to young tenants.

In the new rental regulation in Spain, landlords could previously deduct 60% of primary property rentals from their income; however, this deduction is now only available for 50% of rentals. But in some cases, the law allows for larger deductions:

• If landlords reduce rent by 5% over the previous contract, they will receive a 90% reduction for rental properties in 'stressed market areas'.
• There will be a 70% deduction for rentals to people between 18 and 35 in stressed market areas.
• There will be a 60% deduction for recently renovated properties.

Where are these stressed market areas in the 2024 tax reform in Spain?

Unfortunately, these regions are unclear. Some Autonomous Communities, like Catalonia, already had 'stressed residential market' areas. However, all must identify their 'stressed areas' for the proper functioning of the new law.

These areas will be identified by looking at rising property prices and living expenses relative to household income. It will allow reasonable and manageable rents for tenants. On the homeowners' side, for example, landlords who qualify for a 90% reduction can see an increase of €285 for incomes over €26,000 and an additional €500 for incomes over €60,000.

However, regions governed by the Popular Party, such as Madrid, Andalucia, and the Balearic Islands, have not declared these areas and have criticized the law's legitimacy. On the other hand, the Registry of Tax Advisors of the General Council of Economists (REAF-CGE) states, “Reducing rent can lead to significant tax savings.”

If not declared, landlords will only be eligible for the usual 50% reduction in locations that are not identified as stressed zones, as they will not be able to access the larger discounts.

With the new Spanish Housing Law, the stressed market zone might be expanded over all of Spain.

Is it advantageous to buy a house and rent it in Spain?

Yes. Purchasing investment property in Spain to be a landlord can be a lucrative method to generate income. If you have such a plan, you can pick among potential stressed areas to benefit from the new law mentioned above. Finding the potential areas may not be difficult with a knowledgeable real estate consultant as rents in these areas are typically high.

When looking for a lucrative rental property, you should also pay attention to whether the house you buy in Spain is located in a school district and close to restaurants, cafes, shopping centers, and transportation options.

There are many city options in Spain, but if profit is your priority, the cities of the Andalusia Region are the most sought-after locations for both permanent residence and vacations.

There are 8 provinces here: Granada, Málaga, Almería, Huelva, Jaén, Cádiz, Córdoba, and Seville. Málaga's real estate market has significant potential. It is a popular tourist destination with a strong demand for short-term rentals. You can buy a holiday home in Spain and rent it when you are not using it.

The cost of living in Spain, Málaga is also low. There are many outdoor activities, stunning beaches, historical and cultural symbols, etc. What is even better is that the majority of the year is sunny. You can look at the blog Why Málaga? to learn more about Málaga.

You can always call TEKCE property agents to get more information about how to invest in rental property in Spain and the discounts currently on the market.

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