The 60% reduction in housing rentals has undergone significant changes in Alicante. This article will provide key insights into these changes and how they impact real estate market dynamics, especially for those in the city's upper middle class.
In 2021, adjustments were implemented to reduce 60% in housing rentals, Law 11/2021 on the Fight against Tax Fraud, of July 10, 2021. As a result of the court rulings against the Treasury, this measure was implemented aimed at undeclared or under-declared income (less than actual income declaration) from real estate income.
As of Law 1/2021, if the landlord has not declared the rental income or if the net return is higher than that declared after the Treasury verifies that expenses were applied that were not appropriate to deduct, The 60% reduction will not be applied to those incomes not declared before the Treasury's action (or to those corrected higher yields).
This year 2023 the Law 12/2023, of May 24, for the right to housing. This law proposes tax relief sections
- 90% reduction: 2 requirements must be met, the formalization of a new contract after the Law, in a stressed area, and a 5% reduction compared to the last rent.
- 70% reduction: If, if the previous requirements are not met, one of the following occurs. That a home in a stressed area is rented for the first time to people between 18 and 35 years old or That the tenant is a Public Administration or a non-profit entity, which allocates the home for social rental or the accommodation of people in vulnerable situations economical.
- 60% reduction: if it does not apply in the previous cases, if it had been renovated in the 2 years prior to the start of the contract.
- 50% reduction: In any other case.
Given that the stressed areas are to be established by the Autonomous Communities and that the Popular Party governments have said that they will not legislate in this regard, the most common for the 2024 Income Tax Declaration will be the 50% (general) and the 60% for those homes that have been renovated in 2022 and 2023.
Impact on Real Estate Investment
Real estate owners and investors should be aware of how these changes will affect investment returns and demand for rental properties. Adaptability in investment strategies becomes crucial in this changing context.
- Measures for owners: Owners should consider adjustments in marketing strategies and rates to adapt to demand and maximize their returns.
- Professional advice: Given the complexity of these changes, it is recommended that you seek professional advice. Consulting with real estate experts in Alicante can provide valuable information on how to navigate this new landscape.
We are moving in a context of Common changes in rental legislation, starting with the modification of the Urban Leases Law in 2019, the already mentioned Law 11/2021 on the Fight Against Tax Fraud and Law 12/2023, for the right to housing. This translates into doubts and mistrust on the part of the owners and has had an impact on the increase in rental prices.
To safeguard the interests of owners and tenants, the most effective solution is to have a comprehensive rental management that offers you protection, security and peace of mind in the management of your rentals.