During a plenary session marked by the hangover of the “Begoña commission”, the Madrid Assembly approved on Thursday two laws that include eight tax reductions on the purchase and rental of housing and to attract foreign investments. Both regulations were adopted with the vote of the absolute majority of the PP, against the common rejection of the left. Vox voted against the benefits for foreign investors, but supported the opinion of the law on tax reductions for the purchase and rental of housing.
The two laws, providing tax incentives for foreign investors – known as the “Mbappé Law” – and deductions for those who settle in small towns, will come into force soon with their publication in the Official Journal of the Community of Madrid and could be applied. by filers who meet the requirements of the 2024 income campaign which will be presented during the next year.
These eight new tax cuts are in addition to the 21 promoted by the regional government of Isabel Díaz Ayuso and which have generated tax savings for Madrid residents of more than 31.3 billion euros, according to sources from the Community of Madrid, which also assumes that it is a tax reduction of more than 31.3 billion euros for Madrid residents. the only region in Spain without its own taxes and the one with the lowest tax rates in the entire country.
In addition to these two laws which obtained the final green light in the Plenary Assembly, the 2025 regional budgets, which are already in the Regional Parliament for processing, debate and vote, include a new one hundred percent bonus in asset transfers, for the second – hand owned properties, and in documented legal acts for those of new construction, intended for people affected by line 7B of the San Fernando de Henares metro who acquire a property that replaces the damaged one.
With the new reduction in personal income tax approved this Thursday in the Assembly, we will try to attract investments from new foreign taxpayers. This will be 20 percent of the contribution made in debentures, bonds, treasury bills, shares of listed and unlisted companies or contributions in public limited companies, among others. It will be applicable to changes of residence effective from the year 2024 itself. To benefit from it, it is necessary to maintain both investment residency and tax residency in the region for at least six years.
To be entitled to this reduction, the taxpayer must establish tax residence in the region and cannot have been in Spain in the five years preceding the change of location. Additionally, and among other limitations, you cannot invest in entities domiciled in tax havens. The beneficiary may also not exercise executive or management functions or maintain a working relationship with the entity in which he makes his contributions.
The second approved law, on tax measures aimed at promoting access to housing and the change of residence towards municipalities threatened with depopulation, includes five personal income tax deductions. The first of these will save 1,000 euros on the rental of empty homes and can be applied by small owners who sign contracts with an effective duration of at least three years. Nearly 20,000 beneficiaries will be able to save 20 million euros, according to the estimate from the Ministry of the Economy, Finance and Employment.
Another aims to cushion the increase in variable monthly loan payments due to the rise in rates, taking the Euribor as a reference from December 2022, with a limit of 300 euros and as long as it concerns the main residence. This must not have cost more than 390,000 euros and the family income per capita must not exceed 30,930 euros. It is estimated that it will reach 450,000 mortgage holders and that the reduction for its beneficiaries will be 90 million.
Furthermore, the scope of the deduction for renting a current habitual residence is expanded, increasing the maximum age to be able to apply it from 35 to 40 years. With this measure, nearly 45,000 taxpayers will benefit, in addition to the 65,000 who currently benefit, generating a tax reduction of 50 million euros per year.
And to fight against the depopulation of rural communities (of less than 2,500 inhabitants), and to help those under 35 to change their usual residence, 1,000 euros can be deducted, whether they buy or rent accommodation. In addition, 10% of the acquisition price may be deducted, up to an annual ceiling of 1,546 euros, for ten financial years. In this case, it is estimated that some 1,200 citizens could benefit from a saving of 1.6 million.
To this they can add an additional bonus of 100% on real estate transfer taxes (ITP) in the event of acquiring a second-hand house and on documented legal acts (AJD) for new ones. The expected impact is 7 million euros in savings for Madrid residents.
The deductions approved today at the Assembly are therefore as follows:
1- Deduction of 1,000 euros of personal income tax for the rental of empty housing that can be applied to small owners who sign contracts with an effective duration of at least three years.
2- Deduction of up to €300 from personal income tax to cushion the increase in variable loan maturities by
the increase in rates taking the Euribor as a reference from December 2022, as long as it concerns habitual residence.
3- The personal income tax deduction for the rental of a current habitual residence is expanded, increasing the maximum age to be able to apply it from 35 to 40 years.
4- Deduction of 1,000 euros from income tax for people under 35 who move their usual residence to a rural municipality (less than 2,500 inhabitants), whether they buy or rent accommodation.
5- In addition, 10% of the purchase price is deductible from personal income tax, up to an annual ceiling of 1,546 euros, for ten tax years.
6- In addition, they can add an additional 100% bonus on the property transfer tax (ITP) in case of purchasing a second-hand house.
7- In the case where it is a new home, they can also add an additional bonus of 100% in Documented Legal Acts (AJD)
8- Personal income tax deduction of 20% for new foreign taxpayers who invest in debentures, bonds, treasury bills, shares of listed and unlisted companies or contributions in public limited companies , among others. To qualify, it is necessary to maintain both the investment and tax residence in the region for at least six years.
