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V2163-24 9 October 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimiento neto

90% rental tax reduction unavailable if property is not in a stressed residential market area

A taxpayer inquired whether the 90% reduction on net rental income could be applied to a property located outside a declared stressed residential market area. The Directorate-General for Taxes (DGT) ruled that locating the property within a stressed residential market area is an essential requirement to access this tax benefit.

The question raised

Possibility of applying the 90 percent reduction on the net yield from real estate capital provided for in section 2 of article 23 of Law 35/2006, of November 28, on Personal Income Tax.

The DGT's ruling

The 90% reduction on the net yield from real estate capital requires that the new contract be formalized in a stressed residential market area and that the initial rent be reduced by more than 5% compared to the last rent of the previous contract. If the area has not been declared a stressed residential market area at the time of the execution of the contract, the requirement for the 90% reduction is not met, although the general 50% reduction could potentially be applied.

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