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Tax changes in housing: how it affects the sale and rental of real estate

Cambios fiscales en la vivienda como afecta a la compraventa y alquiler de inmuebles - Tax changes in housing: how it affects the sale and rental of real estate

Law on prevention and fight against tax fraud recently approved in Spain has introduced highly relevant tax changes in housing. These changes can have a direct impact on aspects related to both property sales and rentals. Here you have all the info about it.

Changes that affect rent

One of the most notable tax changes in housing that the new law introduces is the modification in rental benefits. From now on, to get the 60% rent reduction in the IRPF (Personal Income Tax), it will be considered only the income included in their tax payment.

It is a significant modification. Until now, this exemption could get applied even when the tax payment did not include all income. It was enough to declare its existence.

We'll have to be especially careful, and not only because all the income must get included. We won't be able to get the reduction in Personal Income Tax if we miscalculate the payment. It'll get taken into account whether we have declared less income than what we should've or whether we have deducted expenses inappropriately. Of course, it will only be the wrongly declared party that will lose the right to tax reduction.

Tax changes in housing: new reference value

The reference value considered to calculate the Tax on Patrimonial Transmissions and Documented Legal Actions will be that set in the Cadastre. The same will apply to the Capital Gains Tax. It is another of the relevant novelties that imply the new law.

This reference value, which will begin to apply in 2022, will be calculated each year according to the information provided by notaries and registrars. The market value will count more than the real one. If you disagree with that reference value, you would have to challenge and show that the calculation is wrong.

One issue that from now on you must be especially careful about is to pay taxes according to the reference value when the property deed has a higher value. The law states that if the reference value, the declared value and the acquisition value are different, the higher one will get set as the tax base.

If you don't do it that way, you take the risk of getting an inspection by the Administration, and that won't bring you any benefit. Besides, the Administration may examine not only the buyers but also the sellers or heirs.

We can find a final implication of this new reference value in the Municipal Capital Gains Tax. Transmissions made at losses that were not taxed before could from now on have to do so.

Now is the best time to buy or sell

Although the law is already approved, the reference value will not start to apply yet. The Cadastre has until October 30 of the year before its application to publish this valuation of the properties. Therefore, this is the best time to buy or sell real estate before those tax changes in housing start to apply.

If you are a property owner and want to sell or rent, you can put your ad for free on and reach countless potential buyers.

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