Homeowners in Ibiza and the Balearic Islands to Enjoy Tax Incentives for Long-Term Rentals
Homeowners who choose to rent out their properties for the long term in Ibiza and the Balearic Islands are in for a treat with significant tax incentives. The new tax reform proposed by the Balearic Government aims to grant a deduction of 15% in Personal Income Tax for this year on all rental income, starting from the moment the new law is enforced.
Concrete Drafting of Deductions Underway
Antoni Costa, the Vice President and Minister of Economy and Finance, is already hard at work drafting the concrete details of these deductions. The plan is to process these tax incentives from September in the Balearic Parliament. The Popular Party is expected to include this tax cut through an amendment to the draft law that aims to abolish the inheritance tax.
Transitioning from Decree Law to Permanent Legislation
The norm was initially approved through a decree law, but the Balearic Government has requested that it be processed as a permanent law. This will enable other fiscal proposals previously announced by Prohens to be incorporated via amendments.
Tackling Vacant Properties
One of the main goals of the tax cut for long-term rentals is to address the issue of vacant properties in the Balearic Islands. According to the latest data from the Housing Census prepared by the National Statistics Institute, there are approximately 105,434 empty houses in the region, accounting for 16% of the total homes (652,123 floors).
Encouraging Homeowners to Enter the Rental Market
The Conselleria d’Economia i de Habitatge believes that the tax incentives will motivate owners of these empty apartments to finally consider entering the rental market. Fear of defaults has deterred many homeowners from renting out their properties. Until now, they were unable to deduct part of their rental income. Additionally, some owners had taken out insurance to ensure the collection of monthly payments by tenants, but the effectiveness of this insurance has been questioned.
Curbing Rental Prices
Government sources also assert that making more homes available for rent will help mitigate the soaring rental prices in the Balearic Islands. Alongside the tax incentives, the Minister of Habitat is actively working on a housing emergency decree. This measure, among others, aims to improve access to housing and address the ongoing housing crisis.
Rental Aid for Tenants
In addition to the tax incentives for homeowners, the Government of Marga Prohens plans to continue providing rental aid to support home tenants.
Additional Tax Measures
Marga Prohens’ tax package also includes a half-point reduction in personal income tax for individuals earning less than 30,000 euros and a 0.25-point reduction for those with higher incomes. These measures, combined with the tax incentives for long-term rentals, are expected to bring positive changes to the housing landscape in Ibiza and the Balearic Islands.
