Spain’s government is finalizing a housing decree with mortgage tax relief for main homes. The move aims to win Junts’ backing after tense negotiations. Rental contract extensions and new rules for tourist lets are also on the table.
The Spanish government is moving to reintroduce mortgage tax deductions for main residences as part of a new housing decree, aiming to secure the crucial support of Junts in parliament. The measure, which would allow buyers to deduct a portion of their mortgage payments from their income tax, is a key demand from the party led by Carles Puigdemont. Talks remain ongoing, with the government seeking to assemble a majority for the decree amid resistance from other groups.
Under the current proposal, the mortgage deduction would apply to new contracts for primary homes, reviving a benefit that existed until 2013. Previously, homeowners could deduct up to 15% of their mortgage costs, capped at €9,040 per year, resulting in annual tax savings of around €1,356. While the government is considering similar terms, discussions continue over possible changes to the deduction limits and whether to restrict eligibility based on the number of properties owned.
Alongside mortgage relief, the draft decree includes an extension of rental contracts set to expire in 2026 and 2027, new regulations for seasonal and room rentals, and a proposed increase of VAT on tourist apartments to 21%. The government is also weighing Junts’ call for tax deductions on rental income, both for tenants and small landlords. Defining who qualifies as a small landlord remains a sticking point, with previous negotiations suggesting a threshold of one or two properties. Authorities are considering a tiered deduction system, offering greater tax benefits to landlords who set rents below official price indices, in an effort to encourage lower rents.
Junts has submitted its demands in writing, despite publicly denying ongoing negotiations. The party is also pushing for tax exemptions for seniors over 65 who sell their homes to pay for care in residential facilities, as well as incentives for new construction and renovation. Government sources indicate that these proposals are being reviewed for possible inclusion in the final text, which is expected to be approved by the Council of Ministers in July.
The government faces a complex parliamentary landscape. Podemos has threatened to vote against the decree if it includes tax breaks for property owners, demanding that fiscal measures be separated from other housing reforms. However, the executive plans to present all measures in a single package and is confident of building an alternative majority with support from PSOE, Sumar, ERC, Junts, Bildu, PNV, BNG, Compromís, and Coalición Canaria. This coalition could outnumber the opposition, assuming Podemos abstains.
In addition to tax changes, the decree would tighten rules on seasonal rentals, limiting them to justified cases such as work, study, or medical treatment, and preventing their use as a loophole to avoid standard rental regulations. Seasonal contracts would require a minimum duration of 31 days and a maximum of 12 months, with stricter oversight to ensure compliance. If multiple contracts exceed these limits or lack a valid temporary reason, the rental would be reclassified as a standard lease, subject to the five-year minimum term under Spain’s Urban Leases Law. Tenants would also be protected from paying community fees or taxes beyond the agreed rent, both in seasonal and regular contracts.
Room rentals used as a main residence would also fall under price controls in designated high-demand areas. Existing contracts would keep their terms until renewal, after which they must comply with the new rules. The government’s approach reflects ongoing efforts to balance tenant protections, market stability, and political realities. Similar housing policy debates have played out at the regional level, as seen when Catalonia advanced legislation to curb speculative property purchases in key markets—a move detailed in this recent report.
Mortgage tax relief was a longstanding feature of Spain’s housing policy until its removal in 2012 during the financial crisis. Its potential return signals a shift in government strategy, aiming to address affordability concerns and political demands. The outcome of these negotiations will shape the housing landscape for years to come, affecting buyers, renters, and property owners across the country.
