Landlords in Spain to lose tax benefits as new law kicks in

Landlords in Spain are set to lose a percentage of their tax benefits as the new law kicks in this month.

Landlords in Spain that rent out a large number of properties, (more than ten) will lose over half of the tax benefit they currently claim, dropping from 85% down to 40%. According to government sources, this is to balance out the losses incurred due to lower taxable incomes from smaller landlords as rents were lowered during the crisis- it covers a government shortfall.

At present, companies dedicated to renting homes enjoy a special regime when it comes to paying corporation tax, which is levied on profits.

As long as they are legal companies and have eight or more rental homes registered, they can benefit from a bonus that amounts to 85% of what they would have received for the rent obtained from those leases. The exemption amounts to 90% if the tenant is disabled and adaptation works and installations have been carried out in the house.

PSOE and United We Can reached an agreement on Tuesday, October 5, for the coalition government to carry out the Housing Law. This includes specific aspects, such as a new regulations for large property owners.

The law, for those who have more than 10 homes, will regulate prices to lower rents based on the reference index for all contracts in ‘stressed’ market areas. In addition, tax privileges will be withdrawn, according to sources from United We Can.

For smallholders, there will be price freezes and tax incentives to lower rents. As for a tax on empty housing, it will be obtained, according to the agreement, through the surcharge of the IBI up to 150%, which may be applied by the individual municipalities.

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