Lower Income Tax on Rentals

The Government's new tax package introduces measures that make renting more advantageous, both for landlords and tenants. Among the main changes is the significant reduction in the IRS rate applied to property income and the increase in deductions for those who rent a house.

For landlords, the IRS rate on rental income drops from the current 25% to 10%, whenever the monthly rent does not exceed 2,300 euros. This change represents a relevant tax relief, allowing owners to maintain or increase the net profitability of properties without the need to adjust the value of rents. The measure also aims to encourage more owners to put properties on the rental market, contributing to the increase in available supply.

On the tenants' side, the tax benefit is reflected in the increase in the maximum limit for deduction of rents in terms of IRS. For those who rent a permanent home, the maximum deductible amount will increase to 900 euros in 2026 and will reach 1,000 euros in 2027. This increase allows tenants to deduct a larger portion of rent expenses, which results in a reduction in the impact on the family budget. In addition, the measure increases confidence in the existence of a greater supply in the market and, although it does not impose a reduction in rents, it can act indirectly in the stabilization of prices and encourage long-term contracts.

Source: CasaSapo