In 2026, Spanish owners of rental apartments will, for the first time, have a real opportunity to save on taxes if they set up their rental contracts correctly. New provisions in the housing law pave the way for reducing tax on rental income by up to 90 percent, but only for those who meet a series of strict requirements. As rental prices continue to rise and demand for affordable housing remains high, these changes could significantly affect family budgets and the real estate market overall.
Under the new rules, the highest tax benefit is not available to everyone. To receive a 90 percent discount, the owner must sign a new rental contract in an area classified as a stressed housing market and lower the rent by at least 5 percent compared to the previous agreement. This requirement aims to encourage price reductions and expand the supply of affordable rentals, especially in cities where finding a home is becoming increasingly difficult.
Who is eligible for the maximum benefit
Not every landlord will be able to take advantage of the maximum deduction rate. Law 12/2023, which came into force in May, clearly specifies that this applies only to new contracts in so-called “stressed market zones.” These areas are determined by local authorities based on rising prices and limited supply. If an apartment is rented in such an area and the rent is reduced by at least 5 percent, the owner is entitled to a record tax discount.
Other rates apply in different cases. For example, if an apartment is being rented out for the first time or the contract does not meet the criteria for a risk zone, the standard benefit of 50 percent applies. If the property is rented to young tenants aged 18 to 35 or through special programs, the deduction can reach 70 percent. Major renovations carried out within two years prior to renting also entitle the owner to a 60 percent discount.
Tax deduction options
The law provides four main tax deduction options for landlords. The first is the basic 50 percent rate, which applies to most new contracts. The second is 90 percent, if conditions for reduced rent and the apartment’s location are met. The third is 70 percent, if the property is rented to young tenants or through social programs. The fourth is 60 percent, if the owner has invested in major renovations in the last two years.
It is important to remember that to receive any of these benefits, all conditions must be documented: a new contract, proof of reduced rent, tenants’ ages or evidence of renovations. Without such documentation, the tax authority may refuse to apply the deduction, leading to additional charges and penalties.
Practical considerations
Many apartment owners underestimate the importance of proper paperwork. Even a small mistake in the contract or missing supporting documents can result in losing eligibility for a tax benefit. According to russpain.com, about 15 percent of tax deduction applications were rejected last year due to formal errors. Problems most often arise when trying to prove a rent reduction—the tax authorities require clear comparative data from previous and new contracts.
In addition, it’s important to remember that if a tenant moves out before the end of the year, the owner is required to return the deposit within the established time frame. This rule applies whether or not the apartment was rented at a reduced rate. In disputes with tenants, the tax authorities may also scrutinize the accuracy of deduction and deposit return calculations.
In recent years, tax incentives for landlords have become an increasingly relevant topic amid rising housing prices and tighter oversight by tax authorities. In 2024, Barcelona launched pilot projects to cap rent increases and encourage renting to young tenants. At that time, the maximum deduction rate was 70 percent, and many property owners took advantage of this opportunity. The new law expands the range of available benefits, but document requirements have also become stricter. Now, even minor discrepancies can result in losing the right to a discount, so experts recommend carefully reviewing the terms and consulting professionals before filing a tax return.
