Leasing of properties intended for housing
Regulations: Art. 23.2 Law Income Tax
Delimitation of " leasing of a property intended for housing" :
It is considered that this is a lease of a property intended for housing when, in accordance with the provisions of article 2 of Law 29/1994, of November 24, on Urban Leases (LAU), the lease falls on "a habitable building whose primary purpose is to satisfy the permanent housing need of the tenant."
For its part, it must be taken into account that article 3 of the LAU provides that "a lease for use other than housing is considered to be a lease that, falling on a building, has as its primary purpose a purpose other than that established in the previous article." He added that "in particular, urban property leases held for a seasonal period, whether summer or any other, will be considered as such." Therefore, in no case will the indicated reduction be applicable when the property is leased for a season, be it summer or any other.
Clarification: a rental of housing to a legal entity
As a general rule, the aforementioned reduction is not applicable if, as a legal entity, the requirements are not met: the property must be used as a dwelling and its exclusive use must be vested in the individual specified in the lease agreement.
This reduction is also not applicable when the property is leased to a company for the general purpose of use by "its employees."
However, the reduction will apply to net income derived from the leasing of real estate when the lessee is a legal entity and it is proven that the property is used as a residence for certain individuals. That is, when from the outset the purpose of the lease is fully identified in the terms required by the Income Tax Law, stating the exclusive use of the home for a specific natural person (Criteria established by the Central Economic-Administrative Court, its Resolution of September 8, 2016, in an extraordinary appeal for the unification of criteria).
In the case of leasing of real estate for residential purposes, the positive net income , calculated by the difference between the total gross income and the necessary expenses that are considered deductible in the terms previously mentioned, will be reduced by one of the following percentages, depending on the date on which the contract was signed:
Note: In accordance with the ninth Final Provision of Law 12/2023, of May 24, on the right to housing ( BOE of May 15), the new percentage reductions for the rental of properties intended for housing are applicable from January 1, 2024 for contracts signed after May 26, 2023.
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Residential lease agreements entered into on or after May 26, 2023
As a general rule , a reduction of 50 per 100 is set.
However, one of the following increased percentages may be applied instead if all of the following requirements are met at the time of entering into the contract:
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In 90 per 100 when the same landlord has formalised a new lease agreement for a home located in areas with a stressed residential market , in which the initial rent has been reduced by more than 5 per 100 in relation to the last rent of the previous lease agreement for the same home, once the annual update clause of the previous agreement has been applied, where applicable.
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In a 70 per 100 when, not fulfilling the requirements of the previous letter, any of the following circumstances occur:
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When the tenant is a natural person :
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That the landlord rents the property for the first time, and
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That the property is located in an area with a stressed residential market and,
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That the tenant is between 18 and 35 years old.
When there are several tenants in the same dwelling, this reduction will be applied to the portion of the net income that proportionally corresponds to the tenants who meet the requirements set forth in this letter.
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When the tenant is a Public Administration or non-profit entity to which the special regime regulated in Title II of Law 49/2002, of December 23, on the tax regime of non-profit entities and tax incentives for patronage, applies, which uses the home for any of the following purposes:
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To social rental with a monthly rent lower than that established in the rental assistance program of the state housing plan, or
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To the accommodation of people in a situation of economic vulnerability referred to in Law 19/2021, of December 20, which establishes the minimum vital income, or
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When the home is covered by a public housing or qualification program under which the competent Administration establishes a limitation on the rental income.
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In a 60 per 100 when, not fulfilling the requirements of the previous letters, the dwelling had been the subject of a rehabilitation action that had been completed in the two years prior to the date of the signing of the contract.
For these purposes, the concept of rehabilitation provided for in section 1 of article 41 of the Income Regulations will apply.
Clarifications:-
The reduction will be applicable as long as the previously established requirements continue to be met.
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The areas of stressed residential markets to which this reduction may apply will be those listed in the resolution approved by the Ministry of Transport, Mobility, and Urban Agenda, in accordance with state housing legislation.
You can check out these areas of stressed residential market at the following link: https://www.mivau.gob.es/vivienda/alquila-bien-es-tu-derecho/serpavi/consultar-zonas-de-mercado-residencial-tensionado
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Under no circumstances will these reductions apply to lease contracts that violate the provisions of section 6 of article 17 of the Urban Leasing Law.
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Residential lease agreements signed before May 26, 2023
The net income from real estate capital derived from these contracts will be subject to the reduction of 60% , as provided for in section 2 of article 23 of the Personal Income Tax Law in its wording in force as of December 31, 2021.
These reductions will only be applicable to positive net income that has been calculated by the taxpayer in a self-assessment filed before a data verification, limited verification, or inspection procedure has been initiated that includes verification of such income.
In no case will the reduction apply to the part of the positive net income derived from income not included or expenses improperly deducted in the taxpayer's self-assessment and that are regularized in any of the procedures mentioned in the previous paragraph, even when these circumstances have been declared or accepted by the taxpayer during the processing of the procedure .
Please note that the judgment of TS 1312/2020 (appeal 1434/2019), based on the distinction between declaration and self-assessment, established as an interpretive criterion in relation to the wording prior to July 11, 2021, which provided that the 60% reduction "was only applicable with respect to the income declared by the taxpayer", that said reduction was not lost due to not having included the income in the self-assessment and, therefore, that taxpayers could, when regularized, include undeclared income and request the application of the 60% reduction on the resulting net income.
As a consequence of the aforementioned interpretative criterion established by the Supreme Court ruling 1312/2020 and in order to definitively clarify that the reduction for the leasing of real estate used for housing cannot be applied to the positive net income calculated during the processing of a verification procedure, the wording of article 23.2 of the Personal Income Tax Law was modified in this regard, with effect from July , by article 3.three of Law 11/2021, of July 9, on measures to prevent and combat tax fraud, transposing Directive ( EU) 2016/1164, of the Council, of July 12, 2016, establishing rules against tax avoidance practices that directly affect the functioning of the internal market, amending various tax rules and regulating the game.
Tourist rentals:
The reductions provided for in Article 23.2 of the Personal Income Tax Law do not apply to tourist rentals, as they are not intended to satisfy a permanent housing need but rather a temporary one. See in this regard the Resolution of the Central Economic-Administrative Court (TEAC), dated March 8, 2018, Claim number 00/05663/2017 , issued in an extraordinary appeal for unification of criteria.
Until 31 January 2024, Article 54 ter of the General Regulation on actions and procedures for tax management and inspection and for the development of common rules for tax application procedures, approved by Royal Decree 1065/2007 of 27 July, as amended by the Second Final Provision of Royal Decree 366/2021 of 25 May, independently regulated the obligation to report on the transfer of the use of homes for tourist purposes, specifically targeting collaborative platforms that mediate in the transfer.
The declaration was submitted using Form 179, approved by Order HAC /612/2021, of June 16, on an annual basis, between January 1 and 31 of each year, in relation to the information and operations corresponding to the immediately preceding calendar year.
As of February 1, 2024, this reporting obligation is included within the new reporting obligation for certain activities by platform operators. For this reason, Form 040 "Census declaration of , modification and deregistration in the register of non qualified foreign platform operators and in the register of other platform operators required to communicate information" and Form 238 "Informative declaration for the communication of information by platform operators" have been approved by Order ##1## HAC ##1## /72/2024, of February 1, so that for the year 2024 and following years, the obligation to submit the informative declaration on the transfer of use of homes for tourism purposes (form 179) is eliminated.