How to Report Rental Income in Your 2025 Tax Return in Spain?

The Spanish tax season for the 2024 fiscal year began on April 2 and will run until June 30, 2025. During this three-month period, taxpayers in Spain must file their Personal Income Tax return (IRPF) through one of the three channels provided by the Spanish Tax Agency: online, by phone, or in person.

If you earned income from renting out a property in Spain last year, it’s essential to report it correctly to avoid penalties and to benefit from all available tax deductions.

In this article, we explain how to include rental income in your IRPF return, which expenses are deductible, and what has changed under Spain’s new Housing Law.

Do you have a property for rent? The Tax Authorities Must Know About It Too

Renting out a property can generate stable medium- and long-term profits. However, these earnings must be reported to the Tax Office, as they are considered income from real estate capital, meaning income derived from the use of a property that is not linked to the owner’s economic activity.

You must report this income in box 0102 of the draft tax return, indicating the total amount received from the rental without applying any deductions or subtracting expenses yet. In the following boxes, you can add the deductible expenses, which will allow you to reduce the amount on which taxes are applied.

What’s the difference between ‘deduct’ and ‘deductible’?

Although sometimes used as synonyms, they don’t mean the same:

• Deduct means subtracting directly from the taxable base the expenses you have incurred (such as property tax, community fees, repairs…).
• Deductible refers to subtracting a percentage of an amount after the taxable base has been calculated.

So, when we talk about deducting rental expenses, we mean subtracting what you’ve paid as the property owner. Once those expenses are deducted, you can apply tax reductions—such as the 50% reduction or more—on the net income you earned from renting.

What expenses can you deduct in your 2025 Tax Return?

As a landlord, there are various expenses related to your rental property that you can deduct. These are some of the most important:

• Taxes and fees
  • Property Tax (IBI)
  • Municipal fees: trash, lighting, cleaning, etc.
  • Important: you cannot deduct penalties or surcharges due to unpaid rent or fines.

• Community expenses
  • Regular and extraordinary fees (such as special assessments)
  • Community services like electricity, water, elevator, maintenance, doorman…

• Conservation and repairs
  • Necessary works to ensure habitability: replacing appliances, painting, fixing leaks…
  • Home insurance is also considered a related expense and is deductible.

• Mortgage interest
  • You can include only the interest paid, not the total amount of the loan.

• Depreciation
  • You can apply a 3% annual depreciation on the higher of the acquisition cost (excluding land) or the cadastral value of the property.

• Contract and legal defense
  • Expenses related to signing the rental contract, subletting, or assignment.
  • Legal or advisory fees if they are related to defending the property or the landlord’s rights.

Can the tenant deduct anything?

Tenants with a rental contract signed before January 1, 2015, can deduct the rental amount, meaning they can subtract a percentage of the annual rent they have paid. However, contracts signed after this date do not qualify for this state deduction, although they may benefit from regional deductions.

The percentage of these deductions varies depending on the autonomous community and is determined by several factors, such as the tenant’s age, the rent amount, whether the tenant lives alone, and the location of the property (whether it is urban or rural), among other criteria.

How do you calculate the net rental income?

Net income is calculated as follows:

• Gross income: everything received from the rental, whether in cash or in kind (including furniture, appliances, services…).
• Less deductible expenses: the ones mentioned above.
• Equals: net income.

Example:
Rental income: €13,000

Deductible expenses:

• Mortgage (interest): €1,000
• Home insurance: €250
• Community fees: €750
• Property tax (IBI): €600
• Repairs: €200
• Depreciation: €50

Total expenses: €2,850

Net income: €13,000 – €2,850 = €10,150

Rent reduction: 50% → €5,075

This amount is added to the general taxable base, along with your salary and other non-property income.

Deductions in the 2025 Tax Return: Pay attention to the contract date

With the Housing Law in effect since May 2023, the general deduction for renting has been reduced from 60% to 50% for contracts signed after January 1, 2024. So:

• If the rental contract is before 2024, you can deduct 60% of the net income.
• If the contract is from 2024 or later, the general deduction will be 50%.

However, this deduction can be increased if certain conditions are met. In new contracts signed after January 1, 2024, the following enhanced reductions will apply:

• 90% if the contract is signed in a stressed area and the rent is 5% lower than the previous contract.
• 70% if a property is rented for the first time to a tenant between 18 and 35 years old, also in a stressed area.
• 60% if the property has been renovated in accordance with Article 41 of the IRPF regulations, and the renovation was completed within the two years prior to signing the contract.

In summary: the tax reduction percentage will depend on both the contract date and the characteristics of the rental and the property.

2025 Income Tax (IRPF): Tax Brackets and How Much You Owe

Rental income is taxed within the general taxable base, according to the IRPF tax brackets. For 2025, the same brackets as the previous year are maintained:

What if you don’t report the rental income?

Failing to report rental income can be very costly. The Tax Office has many tools to detect irregularities: electricity consumption analysis, cross-referenced cadastral information, tenant declarations…

In these cases, a parallel tax declaration is initiated, where no reductions are applied, and a fine is imposed, which can range from 50% to 150% of the amount evaded, depending on the severity of the case.

Conclusion: Declare properly and avoid problems

Renting out a property can be an excellent source of income, but it also comes with tax obligations. Correctly declaring these earnings on your 2025 tax return not only avoids penalties but also allows you to benefit from deductions and deductible expenses that will reduce your tax bill.

If you have any doubts, it is best to consult a tax advisor who can guide you and ensure a correct and optimized submission.

Are you looking for tenants for your property or planning to do so soon?

It’s essential to have responsible and solvent tenants to ensure a smooth and hassle-free relationship.

At Bocam Spain, we help property owners find ideal tenants quickly and securely. We take care of the entire rental process, from property appraisal to contract signing, ensuring everything is managed efficiently.

If you choose to rent your property with us, you’ll enjoy a complete and transparent service, ensuring you receive your rent payment on time. You won’t have to worry about late payments or defaults, as we handle any situation professionally and without complications.

Want to learn more about how we can help you rent your property safely and stress-free? Contact us today and discover why Bocam Spain is the trusted real estate agency for many property owners in Spain!