Do You Rent Out a Property in Catalonia? Discover All Your Tax Opportunities
The rental market in Catalonia is constantly evolving, and understanding the tax implications is key for any property owner. Under current legislation, especially after the approval of Law 12/2023 on the Right to Housing, options may vary significantly depending on the landlord’s profile. Below, we break down the main situations and their tax effects.
Individual Landlords
Small landlord (fewer than 5 urban properties):
The new law introduces significant changes in personal income tax (IRPF) reductions on net rental income from habitual residences:
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General 50% reduction: when the property is rented for the first time and the price respects the limits established in stressed areas.
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70% reduction: if the new tenant is between 18 and 35 years old and the property is in a stressed market area.
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90% reduction: if the new contract is signed in a stressed area and the rental price is at least 5% lower than the previous contract.
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60% reduction: if the property has undergone a rehabilitation that meets the requirements of the IRPF Law.
These reductions are not cumulative; only the most advantageous one can be applied.
In addition, the owner may deduct all necessary expenses for obtaining income (IBI, community fees, insurance, loan interest, repairs, depreciation, etc.). They must also pay local taxes such as IBI and any applicable municipal fees.
Large landlord (5 or more urban properties):
In designated stressed areas, they are required to respect the reference indexes and cannot exceed the rent of the previous contract, which limits their profitability.
Nonetheless, they may access the same IRPF reductions on net income as small landlords if renting for habitual residence purposes.
They may also deduct expenses and are subject to the same local taxes as other owners. It is important to note they are under greater scrutiny and face a higher risk of administrative penalties.
Legal Entities (Companies)
Rental income is taxed under Corporate Tax, with a general rate of 25%, lower than the maximum IRPF marginal rate.
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Small-sized companies may apply reduced rates on the initial income brackets.
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Deductible expenses: all those related to the rental activity (financial, repairs, depreciation, taxes…).
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VAT: Renting to individuals is VAT-exempt. However, if rented to companies or for other uses (e.g., offices), it may be subject to VAT.
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Limitations: Companies considered large landlords are subject to the same price limitations in stressed areas as individual landlords.
Non-profit Entities and Investment Funds
Non-profit organizations: may enjoy tax benefits if their income is used for social purposes, according to Corporate Tax law.
