The Balearic Government is studying the implementation of a tax deduction of up to 2,000 euros for homeowners in the Balearic Islands who do not increase the rental price above the Consumer Price Index (CPI). The aim of the measure is to curb the rise in rents and contain the increase in the price of the residential market in the archipelago.
The initiative, promoted by the Executive of the Popular Party, would be introduced by means of an amendment in the decree law of strategic projects, which is currently being processed as a law in the Parliament. This has been explained to OKBaleares by the spokesman of the Government and Minister of Economy, Finance and Innovation, Antoni Costa, who said that the proposal is still under study, as it seeks to reach a consensus with the partners of Santiago Abascal.
Costa stressed that this is a deduction in the IRPF, designed to benefit small owners and not large holders or vulture funds. “It is a tax deduction that would favor those who rent a home as a rent supplement, not large investors,” he said.
The conseller has also recognized the concern of the autonomous Executive for the evolution of the rental market in the Balearic Islands, especially in view of the termination of thousands of contracts next year. Although the Government does not have its own data, beyond those provided by the central government, Costa warned that the situation could lead to significant price increases.
According to data from the Ministry of Consumer Affairs, around 24,000 rental contracts will end in 2025, which could translate into an average increase of up to 4,615 euros per year. These are contracts signed in 2021, coinciding with the de-escalation after the pandemic, which now reach the five-year limit established by the Urban Leases Law, allowing landlords to revise the conditions.
This new housing tax deduction would be added to other measures already implemented this year to encourage permanent housing rental. In the 2024 income tax return, homeowners have already been able to deduct 50% of conservation and repair expenses, as well as tax costs or costs linked to obtaining energy efficiency certificates, with a maximum limit of 1,800 euros.
Likewise, a deduction of 40% of certain expenses has been enabled for those who accept jobs that are difficult to cover in the Balearic Islands, including the cost of acquiring or renting a home and air and sea transport between islands, a measure that benefits, among others, agents of the National Police and the Civil Guard.
Despite these initiatives, the Balearic Islands continues to lead the national ranking of the highest rental prices. According to a study by the real estate portal Pisos.com, 86% of rental properties exceed 1,500 euros per month, compared to 37% of the national average. The report warns that the tourist pressure and the high demand for holiday rentals are making the market more expensive, to the point that there is no offer below 700 euros and only 2% of the properties are between 700 and 1,000 euros, leaving a large part of the resident population without access to affordable rentals.
