If you’re a landlord in Andalucía, particularly in high-demand areas like Manilva or Málaga, you’ve likely heard about Spain’s 2023 Housing Law and its enticing tax benefits for long-term rentals. Whether you’re a British expat sipping tea in the UK or an EU resident enjoying the sunny Costa del Sol, these incentives can significantly boost your rental income by slashing your tax bill. In this blog, we’ll break down the current tax benefits for long-term lets in Andalucía, explain how they apply to UK and EU resident landlords, and bring it to life with a practical example of a landlord earning €1,500 monthly rent. Let’s dive in and explore how you can make the most of your property investment while keeping more money in your pocket!
Why Long-Term Rentals in Andalucía Are a Smart Move
Andalucía’s vibrant cities and coastal gems like Málaga, Marbella, and Manilva are rental hotspots, driven by tourism, expat communities, and a growing demand for stable housing. The 2023 Housing Law (Ley 12⁄2023) introduced tax incentives to encourage landlords to offer long-term rentals (properties used as a tenant’s primary residence) in stressed housing areas like Manilva, where rents often eat up over 30% of household income. These benefits are a game-changer, especially for landlords looking to maximize returns while supporting affordable housing.
But what do these tax benefits mean for you, whether you’re a UK resident navigating post-Brexit tax rules or an EU resident enjoying more favorable conditions? Let’s explore the details and see how they play out with a real-world example.
Tax Benefits for Long-Term Rentals in Andalucía
The 2023 Housing Law offers personal income tax (IRPF) reductions for landlords who rent out properties as primary residences in Spain, particularly in stressed housing areas. Here’s what you can claim in 2025:
- 90% Tax Reduction: If you reduce the rent by at least 5% compared to the previous contract in a stressed housing area (e.g., Manilva).
- 70% Tax Reduction: If you rent to tenants aged 18–35, economically vulnerable tenants (e.g., unemployed or low-income), or public/non-profit entities in stressed areas.
- 60% Tax Reduction: If the property was renovated within the last two years or is rented to students during the academic year.
- 50% Tax Reduction: For any long-term rental in a stressed area, even without additional conditions, as long as it’s the tenant’s primary residence.
These reductions apply to net rental income (gross rent minus deductible expenses like maintenance, property tax, or mortgage interest) for landlords filing under Spain’s IRPF system. However, your eligibility depends on your tax residency status, which differs significantly for UK and EU residents.
Key Considerations for UK and EU Landlords
- UK Residents (Non-EU): Since Brexit, UK landlords are treated as non-EU/EEA residents. They pay a flat 24% Non-Resident Income Tax (IRNR) on gross rental income, with no deductions for expenses and no access to the 50–90% IRPF reductions. The Spain-UK Double Taxation Agreement (DTA) prevents double taxation by allowing you to offset Spanish taxes against UK tax liabilities.
- EU Residents: EU/EEA residents (e.g., from Germany or France) pay 19% IRNR on net rental income, after deducting expenses like repairs or community fees. If tax-resident in Spain (spending >183 days/year), they file under IRPF and can claim the 50–90% reductions, making long-term rentals far more tax-efficient.
- Andalucía’s Stressed Areas: Manilva is a confirmed stressed housing area, and other Málaga municipalities like Casares may also qualify due to high rental demand. These areas trigger the 90%, 70%, or 60% reductions for eligible landlords, alongside rent caps (e.g., 2–3% increases via the 2025 IRAV index).
Real-World Example: €1,500 Monthly Rent in Manilva
The story of two landlords—Emma, a UK resident, and Lukas, an EU resident—each owning a charming apartment in Manilva, rented long-term for €1,500/month (€18,000/year) as the tenant’s primary residence. Both face different tax treatments, but the 2023 Housing Law shapes their outcomes.
Emma: UK Resident Landlord
Emma, a retiree in London, bought her Manilva apartment as a holiday home and investment. She rents it out long-term to a local family. As a non-EU resident, she’s subject to IRNR at 24% on gross income, with no expense deductions or access to the Housing Law’s reductions.
- Gross Rental Income: €18,000/year (€1,500 × 12).
- Deductible Expenses: None (non-EU residents can’t deduct expenses).
- Taxable Income: €18,000.
- Tax Rate: 24% IRNR.
- Tax Due: €18,000 × 24% = €4,320/year.
- After-Tax Income: €18,000 – €4,320 = €13,680/year.
Emma files Form 210 annually (by January 20, 2026, for 2025 income) and uses the Spain-UK DTA to offset this €4,320 against her UK tax bill. She sighs, wishing she could claim deductions like her EU friends, but she’s happy with the steady income and plans to consult a tax advisor to explore residency options for better benefits.
Lukas: EU Resident Landlord (Tax-Resident in Spain)
Lukas, a German retiree living in Málaga for eight months a year, is a Spanish tax resident. He rents his Manilva apartment to a young couple (aged 25), reducing the rent by 5% from the previous contract to qualify for the 90% IRPF reduction in a stressed area. He incurs €4,000/year in deductible expenses (e.g., €1,500 IBI, €1,500 community fees, €1,000 maintenance).
- Gross Rental Income: €18,000/year (€1,500 × 12).
- Deductible Expenses: €4,000 (IBI, community fees, maintenance).
- Net Rental Income: €18,000 – €4,000 = €14,000.
- 90% Reduction: €14,000 × 90% = €12,600 reduction.
- Taxable Income: €14,000 – €12,600 = €1,400.
- Tax Rate: IRPF progressive rates (e.g., 19% for income up to €12,450, assuming no other income).
- Tax Due: €1,400 × 19% = €266/year.
- After-Tax Income: €18,000 – €266 = €17,734/year.
Lukas files his IRPF return (Form 100) by June 30, 2026, for 2025 income. He’s thrilled, as the 90% reduction saves him thousands compared to Emma’s tax bill. The rent reduction was a small price to pay, and he’s considering another property to capitalize on Andalucía’s incentives.
Comparison
- Emma (UK): Pays €4,320 tax, keeps €13,680.
- Lukas (EU/Spain Resident): Pays €266 tax, keeps €17,734.
- Takeaway: Lukas saves over €4,000 annually due to Spain’s tax residency, expense deductions, and the 90% reduction. UK landlords like Emma face a higher tax burden but can still profit from Andalucía’s strong rental market.
Why These Benefits Matter in Andalucía
Andalucía’s rental market, especially in Málaga’s stressed areas like Manilva, is booming due to limited supply and high demand from locals, expats, and tourists. The 2023 Housing Law’s tax incentives make long-term rentals more appealing than short-term lets (e.g., Airbnb), which face stricter regulations under Andalucía’s Decree 28⁄2016 (e.g., mandatory licenses, 10% VAT on services). By offering long-term rentals, you not only secure stable income but also tap into tax savings that short-term rentals don’t offer. Plus, you’re helping address the region’s housing shortage—a win-win!
Tips to Maximize Your Tax Benefits
- Confirm Stressed Area Status: Verify if your property in Andalucía (e.g., Manilva, Casares, or Málaga) is in a stressed housing area to qualify for the 50–90% reductions. Check with your local town hall or a tax advisor.
- Assess Tax Residency: UK landlords might consider becoming Spanish tax residents (>183 days/year) to access IRPF reductions, but weigh this against worldwide income tax obligations. Consult a professional to crunch the numbers.
- Document Expenses: EU residents and Spanish tax residents should keep receipts for deductible expenses (e.g., IBI, repairs, insurance) to lower net income before applying reductions.
- Comply with Regulations: Ensure your rental contract specifies the property as the tenant’s primary residence and includes the tenant’s NIE/passport for tax purposes. For the 90% reduction, document the 5% rent reduction.
- Seek Expert Advice: Work with a Málaga-based tax advisor (e.g., Limit Consulting [email protected]) to file IRPF (Form 100) or IRNR (Form 210) correctly and maximize deductions.
Final Thoughts on Tax Savings for Landlords
The 2023 Housing Law’s tax benefits make long-term rentals in Andalucía a golden opportunity for landlords, especially in stressed areas like Manilva. EU residents and Spanish tax residents like Lukas can slash their tax bills with 50–90% IRPF reductions, while UK residents like Emma face a 24% IRNR rate but still profit from high demand. With €1,500 monthly rent, the tax savings for eligible landlords are substantial, turning your property into a smart investment.
Ready to unlock these benefits? Consult Limit Consulting [email protected] in Málaga to confirm your property’s status and optimize your tax strategy.