Rental income tax reductions for Spanish residents: the IRPF 60% reduction and when it applies (2026)

Spanish tax residents who let a property as a tenant’s main home can cut their taxable rental income by 60% under Art 23.2 of Ley 35/2006 (the LIRPF). The Ley 12/2023 restructured this into a 50-90% tier system for new contracts from 1 January 2024, but pre-existing contracts keep the 60% rate. Non-residents and Beckham Law taxpayers get no reduction at all.

What is the IRPF rental income reduction in Spain?

The IRPF rental income reduction, set out in Art 23.2 of Ley 35/2006, allows Spanish tax resident landlords to subtract a percentage of their net positive rental income before it enters the general taxable base. The reduction applies only when the property is rented as the tenant’s habitual residence (vivienda habitual), not for holiday lets, commercial premises or seasonal rentals. The reduced income is then taxed at the landlord’s marginal IRPF rate, which is progressive and starts at the lowest combined state and autonomous bracket.

The reduction sits on top of the expense deduction, not instead of it. A resident landlord first deducts all allowable expenses (mortgage interest, community fees, IBI, insurance, repairs, management fees and 3% amortization of the construction cost), calculates the net rental income, and then applies the percentage reduction to what remains. This two-stage structure is the central reason why resident landlords pay far less tax than non-residents on the same property. For the broader picture of how IRPF treats property income, see our guide to Spanish IRPF for property owners.

How does the 60% reduction work for contracts before 26 May 2023?

Contracts signed before 26 May 2023 are grandfathered at the original 60% reduction rate under Disposición Transitoria 38 of the LIRPF, introduced by Ley 12/2023. The Agencia Tributaria confirms that these contracts continue to apply the 60% rate in the redaction in force at 31 December 2021 for as long as the tenancy continues on the same terms. The landlord does not need to take any action to keep the rate.

The practical effect is substantial. On EUR 9,350 of net rental income (a typical Costa del Sol apartment generating EUR 18,000 in annual rent after EUR 8,650 in deductible expenses), a 60% reduction leaves only EUR 3,740 taxable. A resident landlord with no other income pays the lowest marginal rate on that. A higher-bracket resident pays more, but the reduction still leaves them well below the non-resident alternatives discussed below.

What changed under Ley 12/2023 for new rental contracts?

The Ley 12/2023, in force from 26 May 2023, replaced the flat 60% reduction with a four-tier system for contracts from 1 January 2024. Contracts signed between 26 May and 31 December 2023 kept the 60% rate for 2023 and moved to the tier system from 2024. The Agencia Tributaria sets out the new structure, which depends on the location and the tenant profile. The requirements must be met at the time the contract is signed and the reduction applies for as long as they continue to hold.

The four tiers are:

Tier	Reduction	Conditions
90%	90%	Stressed zone, new contract by same landlord, rent cut by more than 5% vs previous contract
70%	70%	Stressed zone, first-time rental to a tenant aged 18-35, or social housing let to a public body or non-profit
60%	60%	Property rehabilitated within the two years before the contract date
50%	50%	All other habitual-residence rentals

Stressed zones (zonas de mercado residencial tensionado) are declared by the Ministerio de Transportes, Movilidad y Agenda Urbana under Art 18 of Ley 12/2023. As of 2026, only municipalities in Catalonia have been declared, per Resoluciones of March and October 2024. No Andalusian municipality, including any Costa del Sol town, has been declared a stressed zone, so most new Costa del Sol contracts default to the 50% tier unless the property was recently rehabilitated. Contracts that breach Art 17.6 of the LAU (rent update limits) lose the reduction entirely, per the Agencia Tributaria guidance. For the tenancy law context, see our LAU guide.

What expenses can a resident landlord deduct before applying the reduction?

A resident landlord deducts all expenses directly and inseparably linked to the rental before calculating net income, per Art 23.1 of the LIRPF and Art 14 of the Reglamento. The Agencia Tributaria manual lists the standard categories: mortgage interest on the property loan (capped at the rental income from that property), community fees (cuota de comunidad), IBI, building and contents insurance, repair and maintenance costs, and letting agent or management fees.

The most significant deduction is amortization. Under Art 23.1.b) of the LIRPF and Art 14 of the Reglamento, landlords can deduct 3% per year of the higher of the acquisition cost (excluding land value) or the cadastral value (excluding land value). The acquisition cost includes the purchase price, notary and registry fees, transfer tax and agency fees, but excludes the value of the land. When the land share is unknown, it is prorated using the cadastral split between land and construction. A December 2025 TEAC resolution confirmed that accumulated amortization cannot exceed the property’s acquisition cost.

For non-resident landlords, the deduction landscape is different and generally worse. EU and EEA residents can deduct the same expenses as residents under Art 24.6 of the LIRNR. Non-EU residents are taxed on gross income with no deductions under the statute, though the Audiencia Nacional ruling of 28 July 2025 (case 636/2021) held that this violates the free movement of capital and may open a path to deductions. See our non-resident rental income tax guide for the full IRNR treatment.

How does the resident reduction compare to non-resident and Beckham Law taxation?

The comparison is the single biggest tax decision for a landlord who can choose their residency status. A full IRPF resident gets both expense deductions and the rental reduction, taxed at progressive marginal rates. A non-resident gets neither deduction rights (for non-EU) nor any reduction, paying a flat rate on gross or net income. A Beckham Law taxpayer is treated as a non-resident for rental income purposes, so the Art 23.2 reduction does not apply.

The Agencia Tributaria confirms that Beckham Law taxpayers (Art 93 LIRPF) pay Non-Resident Income Tax on their Spanish-sourced income, filing Form 151. Rental income is taxed at 19% (EU/EEA origin) or 24% (non-EU), with no rental reduction available. For a relocating professional who owns a rental property in Spain, this is a material trade-off against the Beckham Law’s 24% flat employment rate. For the residency decision itself, see our tax residency 183-day rule guide.

The table below shows the difference on EUR 18,000 of annual gross rent from a Costa del Sol apartment, with EUR 8,650 in deductible expenses (net income EUR 9,350):

Landlord status	Reduction	Taxable income	Rate	Tax due
Resident, 60% reduction (pre-26 May 2023)	60%	EUR 3,740	Marginal IRPF (lowest bracket)	Lowest of all
Resident, 50% reduction (standard new contract)	50%	EUR 4,675	Marginal IRPF (lowest bracket)	Low
Resident, 90% reduction (stressed zone, over 5% rent cut)	90%	EUR 935	Marginal IRPF (lowest bracket)	Lowest
EU non-resident (deducts expenses, no reduction)	0%	EUR 9,350	19% flat (IRNR)	EUR 1,777
Non-EU non-resident (gross tax, no deductions)	0%	EUR 18,000	24% flat (IRNR)	EUR 4,320
Beckham Law, EU origin (deducts expenses, no reduction)	0%	EUR 9,350	19% flat (IRNR)	EUR 1,777
Beckham Law, non-EU origin (no deductions)	0%	EUR 18,000	24% flat (IRNR)	EUR 4,320

A higher-bracket resident still pays far less than a non-EU non-resident because the reduction cuts the taxable base before the marginal rate applies. The reduction’s value compounds at every income level. For more on deductible expenses, see our rental tax deductions guide.

When does the rental reduction NOT apply?

The reduction does not apply in three clear situations. First, tourist and seasonal rentals are excluded entirely: the Agencia Tributaria states that tourist lets do not qualify for any reduction because they serve a temporary need rather than a permanent housing requirement. Second, the reduction only bites on net positive income: if expenses exceed rental income, no reduction applies, though the loss can be carried forward for four years against future positive rental income from the same property under Art 23.4 of the LIRPF. Third, contracts that breach Art 17.6 of the LAU lose the reduction.

The reduction also requires the income to be declared in a self-assessment (autoliquidación) filed before any verification, limited inspection or full inspection covering those rental revenues has begun. Income regularized in such a procedure cannot benefit from the reduction, even if the landlord accepts the adjustment during the process. This is a compliance incentive to declare rental income correctly and promptly on the annual IRPF return (Modelo 100).

This guide is general information, not legal or tax advice. Rules change and individual circumstances differ. Verify current requirements with an independent lawyer (abogado) or tax advisor (gestor/asesor fiscal) before acting.