From Sánchez's announcement, the fine print: the PSOE registers the law to promote affordable rentals

MadridSpanish Prime Minister Pedro Sánchez kicked off the year by announcing a plan to mobilize affordable rentals across the country and reverse the difficulties faced by many citizens, especially young people and migrants, in accessing housing. Five months later, and amid social pressure with demonstrations for the right to housing in the country's main cities, some of the measures were put into writing through a bill that the PSOE (Spanish Socialist Workers' Party) filed in the Congress of Deputies. Specifically, in the text presented this Thursday, the Socialists incorporate many of the fiscal measures from the plan announced by Sánchez.

The Socialists' intention is for the proposal to be processed this June, but the parliamentary process is still long, and it's still unclear what the parties will do. However, Housing Minister Isabel Rodríguez (PSOE) has already stated that they are working to secure the support of the parties. In fact, Podemos and Sumar have already expressed their distrust of the proposal because it includes tax breaks for property owners. Here's the fine print of the measures:

VAT on tourist apartments

The PSOE (Spanish Socialist Workers' Party) proposes increasing the VAT on properties used for tourism to 21 percent. However, the measure was agreed upon at the time with Sumar, the minority partner within the Spanish government, and seeks to replicate the European directive that goes in that direction. This 21% VAT rate would affect properties rented for fewer than 30 nights in municipalities with more than 10,000 inhabitants, whether managed by individuals or companies.

Rebates for owners

Property owners are expected to have access to the tax breaks included in the state housing law without having to declare themselves a stressed area. In this way, Pedro Sánchez's government is trying to bypass the blockade imposed by the autonomous communities that have not implemented the law, those governed by the People's Party (PP), and which, therefore, have not declared these types of areas.

The text includes tax breaks ranging from 60% to 100% of the rent depending on the price at which the owner rents the apartment (affecting properties coming onto the market for the first time and those contracts in which the price is reduced by 5%). Depending on the price and the tenant's circumstances (for example, age), the deduction is greater or lesser. A tax break of up to 70% is also provided if the property is rented from a public authority.

Tax on non-EU foreigners for the purchase of a home

A complementary state property transfer tax (ITP) is being introduced for non-EU residents who purchase homes in the state. The tax will be up to 100% of the property's cadastral value, the declared price, or the market value.

Taxation of vacant apartments

An increase in taxation on vacant housing is also on the table to "incentivize its release into the rental market," according to the Socialists in a statement.

Modification of the SOCIMIs

For SOCIMIs that own rental apartments, taxation on a portion of profits not distributed through dividends will increase from 15% to 25%. The increase does not affect SOCIMIs that manage offices, warehouses, or shopping centers, such as the Catalan company Colonial. However, the increase includes deductions of between 50% and 60%, provided the assets (real estate) are used for affordable rentals, or 100% if the profit obtained is reinvested in affordable rental apartments for three years. The government will consider rentals affordable if they do not exceed the Ministry of Housing's index, if they are subsidized, if the rental price does not exceed 30% of the tenant's income, or if the cost is below €26,400 per year.

Finally, there are also proposals to amend the Personal Income Tax law to maintain tax deductions for energy renovation projects in 2025, and to change the public sector contracts law to promote public-private collaboration in housing construction, among other measures.