The Ministry of Transport and Urban Agenda led by José Luis Ábalos has finally presented the proposal for tax benefits for homeowners that he had been talking about for weeks without specifying.
The Socialists definitively distance themselves from the regulation of rental prices, claiming in a statement that “the rental regulation systems tested in Germany or France have not proven effective.” Instead, they propose to remodel a measure that already exists in Spain: the 60% reduction in personal income tax for owners who rent their home.
This discount is currently applied to all landlords who declare rental income (55% of the total, according to Gestha data). With her, Spain stops earning 1,000 million euros a year.
The socialist proposal, presented today to its partner from the United We Can Government, involves maintaining the 60% reduction in existing contracts and lowering it to 50% in the new ones. From there, they propose to increase the bonus as appropriate.
- If the owner rents at the price of protected housing, it can be reduced 60%.
- If the owner rents a recently renovated home, it can be reduced 60%.
- If the tenant is a young person between 18 and 35 years old and the owner rents at a “limited” price, it can be reduced 70%.
- If the tenant has “reduced income,” the landlord may be reduced by an undetermined percentage.
- If the landlord makes the home available to a social rental program, it can be reduced 70%.
- If you transfer it to a non-profit entity specialized in vulnerable groups, it can be reduced 70%.
In addition, the proposal includes the creation of “stressed zones”. If an area is declared as such by the competent administration (the Autonomous Community or the City Council), landlords may apply the following reductions:
- If the landlord is renting the property for the first time, it can be reduced 70%.
- If the owner lowers the rent by 10% compared to the previous contract, it may be reduced 90%.
How this formula works
Let’s remember how this reduction works: if an owner earns 12,000 euros a year for renting his apartment and declares 3,600 euros per year of expenses (community, repairs or mortgage interest), he should pay personal income tax of 8,400 euros (the net yield of the apartment).
However, with the bonus you pay taxes only on a percentage of this amount. If the bonus is 60%, the owner pays taxes of 3,360 euros (40% of 8,400 euros). If the bonus were 90%, you would pay taxes only on 840 euros: 10% of the net return.
Here’s a graphical example of how it works as defined now:
The United We can have accused the PSOE of “flagrantly” breaching the government agreement. “The offer of the PSOE consists of dedicating public resources to assume, on the part of all taxpayers, the reductions in income made by those who have a rental home,” explained party sources. “From Unidos Podemos it is considered that this not only breaches the government agreement by not including the regulation of rent prices, but is also antisocial by promoting that whoever has more, and has contributed the most to inflate the bubble, benefits more measure of these incentives sustained with everyone’s money “.
The Ábalos ministry considers, for its part, that this is an “ambitious proposal that makes the containment of housing rental prices compatible with a significant increase in the existing supply stock” and that with it “continues to comply with current agreements of Government and Budgets “.