Income Tax Deduction on Home Rents

Each April Spanish taxpayers have to file their income tax returns including tenants. Apart from La Rioja and Murcia, all the autonomous communities offer tax deductions on home rents.

For example, in the autonomous community of Madrid, people below the age of 35 can deduct 20 per cent of their rent, capped at 840 euros, provided they earn less than 25,620 euros a year or 36,200 if they file a joint tax return. In addition, the rent must exceed 10% of the taxpayer’s income and the tenant must have lodged a deposit with the corresponding regional authority.

In other regions, such as the autonomous community of Valencia, there are different deductions according to the characteristics of the taxpayer. There is a general deduction that amounts to 15 per cent of the rental payment with a cap of 459 euros. People below the age of 35 and persons with a specific level of disability can deduct 20 per cent, up to 612 euros. The percentage of tax relief increases to 25 per cent with a limit of 765 euros if the tenant, in addition to being below the age of 35, has a certain level of disability. However, there are a number of other requirements such as the sum of general taxable income and savings taxable income must not exceed 25,000 euros for an individual tax return or 40,000 euros for a joint tax return; the duration of the lease must be less than a year and it must have been signed after April 1998; the property must be for habitual use; the deposit must have been lodged with the corresponding regional authority; none of the tenants can be the owner of a property less than 100 kilometres from the rental property and the tenant must not be receiving tax deductions for investment in their habitual place of residence.

In Catalonia, there is a tax deduction on the rent of the habitual residence of 10 per cent, with a limit of 300 euros a year, if the tenant is less than 32 years old, has annual income of less than 20,000 euros -30,000 euros for a joint tax return-, has been unemployed for at least 183 days in 2017, has a level of disability of over 65 per cent or is a widow/er over 65 years of age.

In Galicia, the deduction amounts to 10 per cent of the rent paid in 2017, with a cap of 300 euros per year and lease. With two or more children in their care, the deduction increases to 20 per cent with a limit of 600 euros. These amounts are doubled if the tenant is disabled. However, this deduction is only applicable to taxpayers up to the age of 35 and the lease must have been signed after January 1 2003. In addition, the deposit must have been lodged with the corresponding regional authority and the sum of the general and savings taxable income less the personal and family minimum must not exceed 22,000 euros.

In some cases, a state tax deduction can be added to the deductions for each autonomous community, but only if the lease was signed before 2015. This deduction is for 10.05% of the amounts paid and only if the taxpayer’s annual income is below 24,020 euros.

At Testa Residencial we manage over 9,000 home rental properties in the main Spanish regions and cities. Client satisfaction is our main concern and so we hope this post has been useful to you. Stay in touch! There will be more interesting information in future posts.