The Congress of Deputies moves forward in the modification of the Economic and Fiscal Regime (REF) of the Canary Islands, granting an exclusive advantage to the investors of the archipelago in the field of housing. With this change, those who buy a property for long-term rental will be able to deduct the investment in the Corporate Income Tax (IS) and in the Personal Income Tax (IRPF) under the conditions established in the Reserve for Investments in the Canary Islands (RIC).
The measure, promoted by PSOE and Coalición Canaria, allows entrepreneurs and the self-employed operating in the Canary Islands to reinvest their profits in the purchase of homes for rental for regular use without paying taxes on those profits, an advantage that investors from other autonomous communities, such as the Balearic Islands, where the rental pressure is one of the highest in Spain, will not be able to benefit from.
Buy a house in the Canary Islands and pay less taxes
The key to this tax privilege lies in the RIC, an incentive that already allows Canary Island companies and professionals to deduct up to 90% of their profits if they reinvest them in certain sectors. With the proposed modification, the residential real estate market will be added to the list of subsidized activities, allowing the purchase of homes for renting to be a massive tax deduction.
📌 Practical example: If a businessman in the Canary Islands obtains 100,000 euros in profits, instead of paying 25% in Corporate Tax (25,000 euros) or up to 47% in Personal Income Tax (47,000 euros, depending on the maximum bracket), he can use that money to buy a house to rent and not pay taxes on it.
⚠️ Main condition: The property must be rented for regular use for at least five years for the tax benefit to be consolidated.
Why not in the Balearic Islands?
While in the fortunate islands there will be tax exemptions to encourage the purchase of housing for renting, in the Balearic Islands there is no similar mechanism to help curb the housing crisis.
The central government has still not approved specific incentives for the Balearic Islands, despite the fact that the archipelago is the autonomous community with the highest rental prices in Spain and where buying a home has become an inaccessible luxury for the majority of the population.
