Renting out long-term in the Canaries: the 50, 60, 70 and 90 % reductions after the Housing Law — and why most landlords get 50 %

Four percentages decide how much of a long-term rental income a resident landlord in the Canaries actually pays tax on: 50, 60, 70 and 90. Since the Housing Act rewrote the rule for contracts signed from 26 May 2023, the headline reduction is the 50 % one — the 60 % that every landlord used to get now needs a rehabilitation, and the 70 % and 90 % need something that does not exist on the islands in September 2026: a zona de mercado residencial tensionado declared by the ministry. This piece sets out the four reductions and their conditions, what comes off the rent before any of them applies, a worked example on a flat in Puerto del Rosario for a resident, an EU non-resident and a British owner, and the Canary layer — a €1,000 regional deduction for putting a home on the long-term market, and a deposit rule with a fine attached.

The four reductions, and why most landlords get 50 %

The reduction applies to the net income from letting a property «destined to housing» — a dwelling let as the tenant's permanent home under article 2 of the Urban Leases Act. Seasonal lets, holiday lets and lets to a company for its staff are outside it, whatever the length of the contract (Ley 35/2006, art. 23.2; Ley 29/1994, arts. 2–3). Within that perimeter the Act now offers four percentages, tested at the moment the contract is signed and kept while the conditions hold:

• 90 % when the same landlord signs a new contract on a home in a declared tensioned zone and the initial rent is more than 5 % below the last rent of the previous contract, after its annual update.
• 70 % when, failing the above, the landlord lets the home for the first time, it lies in a tensioned zone and the tenant is between 18 and 35 — or the tenant is a public administration or a qualifying non-profit letting it as social housing, or the home sits in a public programme that caps the rent.
• 60 % when, failing both, the home was the object of a rehabilitation finished within the two years before the contract — a rehabilitation in the tax regulation's sense: subsidised works, or a reconstruction of structure, façades or roofs costing more than 25 % of the purchase price or market value (RD 439/2007, art. 41.1).
• 50 % in every other case (art. 23.2 a–d).

Two facts put most Canary landlords in the last line. The first is that no municipality of the Canary Islands appears in any of the ministry's lists of declared tensioned zones — the resolutions of 30 January, 23 April and 24 July 2026 add Basque, Asturian, Galician and Madrid areas to the Catalan block, and none in the islands. Las Palmas de Gran Canaria asked the Canary Government for the declaration in 2024, and the regional government drafted a procedure with the municipalities that same year; until a Canary zone is published by the Ministry of Housing, the 70 % and 90 % lines cannot be applied anywhere in the archipelago (Ley 12/2023, art. 18; the Act's final provision 2). The second is that a rehabilitation in the regulation's sense is a heavy one — a new kitchen and bathroom do not reach the 25 % threshold on a €200,000 flat.

Contracts signed before 26 May 2023 keep the old 60 % for as long as they run, including their statutory extensions (transitional provision 38). And three conditions cut across all four lines: the reduction applies only to income the landlord declared in a return filed before the tax office opened a check on it — undeclared rent found in an inspection is taxed with no reduction at all; it is lost on the part of the income that comes from expenses wrongly deducted; and it is denied to contracts that breach the rent cap of the Urban Leases Act in tensioned zones (art. 23.2, last paragraphs; Ley 29/1994, art. 17.6).

What comes off before the reduction: the expenses

The reduction is a percentage of the net figure, so the expenses matter as much as the line you fall in. The Act and its regulation allow every expense necessary to obtain the rent, and name the main ones (art. 23.1; RD 439/2007, arts. 13–14):

• Mortgage interest and repairs, together, up to the year's gross rent; the excess carries forward for four years. Repairs are painting, plastering, replacing a boiler, a lift or a security door — not extensions or improvements, which go into the amortisation base instead.
• Local taxes and charges: the IBI, the refuse charge, non-state levies without a penal character.
• Community fees, administration, agency and legal costs, insurance, the energy certificate, the contract's formalisation.
• Bad debts, once six months have passed since the first demand without renewal, or the tenant is in insolvency.
• Amortisation of 3 % a year on the higher of the purchase cost and the cadastral value, land excluded — the largest expense on most flats and the one most landlords forget.

For the days the home is not let, the landlord declares an imputed income instead: 1.1 % of the cadastral value where values were revised in the last ten years, 2 % otherwise (art. 85).

A worked example: a €900 flat in Puerto del Rosario

A two-bedroom flat bought for €150,000, cadastral split 40 % land, let at €900 a month for the whole of 2026 to a family, contract signed in 2025. Gross rent €10,800. Expenses: mortgage interest €2,400 and painting €600 (€3,000, within the gross-rent cap); IBI €320; community €720; insurance €260; contract and agency €200; amortisation 3 % of €90,000 of construction value, €2,700. Total €7,200; net income €3,600.

• Resident landlord, 50 %: taxable €1,800. At a combined marginal rate of, say, 30 %, tax of about €540 — half of what the same rent would cost without the reduction.
• Same flat after a rehabilitation, 60 %: taxable €1,440, tax about €432.
• If Puerto del Rosario were ever declared a tensioned zone: a first let to a 28-year-old, 70 %, taxable €1,080; a new contract at more than 5 % below the previous rent, 90 %, taxable €360. Neither exists today.
• German owner, non-resident: no reduction, but the same expenses — €3,600 net at 19 %, €684.
• British owner, non-resident: no reduction and no expenses — €10,800 gross at 24 %, €2,592.

Non-residents: no reduction, and two different bases

The reductions are a Personal Income Tax rule, and the Non-Resident Income Tax Act says in as many words that the base for non-residents without a permanent establishment is the gross amount «without the reductions» (RDLeg 5/2004, art. 24.1). Residents of another EU or EEA State with exchange of information may deduct the expenses the Personal Income Tax Act allows, provided they are directly linked to the Spanish income, and pay 19 %; everyone else — British, Swiss, American owners — pays 24 % on the gross rent (arts. 24.6 and 25.1.a). The return is the Modelo 210, which our Modelo 210 guide walks through, and for the empty months the imputed income is declared on the same form.

The gap is worth stating in figures: on the flat above, a resident pays about €540, a German owner €684, a British owner €2,592 — on the same rent, the same building and the same tenant. For a non-EU owner that gap is the first number in any conversation about residence, about holding the property through a company, or about the holiday-let regime, which has its own arithmetic and its own rules.

The Canary layer: a €1,000 deduction and a deposit with a fine attached

Canary residents have three regional deductions that sit on top of the state reduction, in the regional part of the return (Decreto Legislativo 1/2009, arts. 15 ter, 15 quater and 16):

• €1,000 for putting a home on the long-term market: once per property, up to five properties, in the year the contract is signed, for a home that in the previous year produced imputed income — an empty home — or was bought within the previous six months; the contract must last three years in total, the tenant cannot be the spouse or a relative to the third degree, and the letting cannot be a business activity. Break the conditions and the €1,000 comes back with interest.
• 75 % of a rent-default insurance premium, up to €150 a year, for contracts of a year or more at €800 a month or less, with the deposit lodged and the tenant's tax number and the cadastral reference in the return.
• 10 % of the costs of readying a home for letting — repairs, contract costs, insurance, the energy certificate — up to €150 per property, on invoices; incompatible with the previous one on the same amounts.

The deposit is the other Canary rule that catches new landlords. The one-month bond of the Urban Leases Act is not the landlord's to keep in an account: in the Canaries it must be lodged with the Instituto Canario de la Vivienda within a month of the contract and entered in the regional Register of Deposits, and the omission is an administrative offence fined by reference to the bond not deposited (Ley 2/2014, annex arts. 2 and 12). Two of the three regional deductions require proof of that deposit, and the tax office cross-checks the register.

Where we come in

Our tax desk in Caleta de Fuste and Costa Calma works out which of the four reductions your contract qualifies for, builds the expense file — amortisation base, interest, repairs, the cadastral split — so that the net figure is right and defensible, lodges the deposit and claims the regional deductions, files the Modelo 210 for non-resident owners, and models the resident-versus-non-resident gap before you decide how to hold the property. See tax advisory and property management, or book a consultation — we reply within one business day.

Common questions

Which reduction do I get for a long-term let in Fuerteventura in 2026?

Fifty per cent, for a contract signed from 26 May 2023 on a home let as the tenant's permanent residence. The 60 % needs a rehabilitation finished in the two years before the contract; the 70 % and 90 % need a declared tensioned zone, and no Canary municipality is on the ministry's lists as of the July 2026 resolution. Contracts signed before 26 May 2023 keep the old 60 %.

I am not resident in Spain. Do I get any reduction?

No. The Non-Resident Income Tax base excludes the reductions. An owner resident in the EU or the EEA deducts the same expenses as a resident and pays 19 % on the net; an owner resident anywhere else pays 24 % on the gross rent, with no expenses. On a €900 flat that is roughly €684 against €2,592 a year.

What happens if I never declared the rent and the tax office finds it?

The rent is taxed in full: the reduction applies only to income declared in a return filed before a check began, and never to income regularised in an inspection. The regional Canary deductions are lost too, since they require the income to be declared with the tenant's tax number and the cadastral reference.

Is the reduction lost if the flat is empty for part of the year?

No — it applies to the net income of the months let. For the empty days the landlord declares imputed income instead, 1.1 % or 2 % of the cadastral value, with no expenses and no reduction. A home that stood empty all of the previous year and is let for three years qualifies for the €1,000 Canary deduction in the year of the contract.

Facts verified in September 2026 (Personal Income Tax Act, Law 35/2006, articles 23 and 85 and transitional provision 38; Regulation RD 439/2007, articles 13, 14 and 41.1; Housing Act, Law 12/2023, article 18 and final provision 2; Urban Leases Act, Law 29/1994, articles 2, 3 and 17.6; Non-Resident Income Tax Act, RDLeg 5/2004, articles 24 and 25; Canary consolidated tax text, Decreto Legislativo 1/2009, articles 15 ter, 15 quater, 16 and 18; the ministry's resolutions of 30 January, 23 April and 24 July 2026 on tensioned zones; Canary Law 2/2014 on rental deposits; the AEAT 2025 manual). Figures are worked examples on 2026 rates; your own will differ.