Spain Expands Rental Income Tax Reductions to Non-Tensioned Areas: 2025 Proposal Explained

In an effort to stimulate affordable housing nationwide, the Spanish government has proposed a major expansion of personal income tax (IRPF) deductions for landlords who reduce their rental prices—even in areas not officially designated as “tensioned housing zones.” This new measure, part of the broader 2025 housing reform package, could benefit thousands of property owners across Spain.

Here’s what landlords and investors need to know about this new initiative.

What’s New in the 2025 Proposal?

Under Spain’s current Housing Law, rental income tax reductions are only available to landlords who:

• Offer long-term leases
• Rent in officially designated “tensioned areas”
• Comply with affordability and energy efficiency criteria

The new proposal by the PSOE-led government aims to:

• Extend these tax benefits to landlords in non-tensioned areas
• Encourage more property owners to reduce rents voluntarily
• Help stabilize rental prices across the country—not just in high-demand cities

How the Rental Tax Deduction Works

If approved, landlords who reduce rent for new or existing tenants could benefit from substantial IRPF deductions, such as:

• 50% reduction in net taxable rental income (general base deduction)
• Up to 90% deduction in some cases if specific conditions are met (e.g. large rent drop, young tenants, energy-efficient housing)

This reduction applies to personal income tax (IRPF) declared annually. It’s especially beneficial for:

• Individual landlords (not corporations)
• Spanish tax residents
• Non-residents with long-term rental income (if they opt for IRPF treatment via tax residency)

 Key Conditions to Qualify

To benefit from these deductions, landlords typically must:

• Register a new rental contract with a rent reduction vs. the previous lease
• Ensure the property is used as the tenant’s primary residence
• Meet certain rental price and size limits, even in non-tensioned areas

Details may vary depending on the final text of the law, but the core idea is to reward landlords who lower rental costs voluntarily.

Why This Matters for Property Owners

This reform could:

• Make long-term rentals more attractive compared to tourist rentals (which are facing tighter regulations)
• Provide real tax savings for owners willing to lower rent
• Level the playing field between tensioned and non-tensioned markets

At a time when short-term rental rules are tightening and property taxes are rising, IRPF deductions can significantly improve after-tax rental yield.

Example Scenario

Luis owns an apartment in Zaragoza (a non-tensioned area). He previously rented it for €850/month. He signs a new lease at €750/month and registers it.

• Under the new proposal, Luis qualifies for a 50% tax deduction on net rental income
• If his taxable rental profit is €5,000, he would only pay IRPF on €2,500
• Potential savings: €500–€1,200 depending on his tax bracket

How Taxadora Can Help

At Taxadora, we support property owners and non-residents with:

• Analyzing rental contracts to assess deduction eligibility
• Filing IRPF returns or Modelo 210 with maximum tax savings
• Ensuring compliance with changing rental tax rules

Whether you’re managing a portfolio or renting out a single property, our team helps you optimize every tax benefit available.

Final Thoughts

Spain’s 2025 proposal to extend rental income tax deductions to non-tensioned areas marks a big shift in how the government incentivizes affordable housing. If passed, it could mean major tax savings for landlords willing to reduce rent—and a new strategy for balancing rental income with tax efficiency.

For the latest updates on Spain’s tax reforms and landlord incentives, visit our blog or speak with a Taxadora expert today.