Spain’s General Directorate for Taxation (DGT) has issued a binding ruling clarifying the tax treatment of room rentals. In Binding Consultation V0412-25, dated March 20, 2025, the DGT confirms that property owners who rent out individual rooms may apply a 50% reduction to their net positive rental income, provided that the rooms are used as the tenants’ primary residence.

The consultation was submitted by a taxpayer planning to rent out individual rooms in a property he owns under residential lease agreements governed by Spain’s Urban Leases Act (Ley de Arrendamientos Urbanos – LAU). The DGT clarifies that this activity does not constitute an economic activity. Instead, the income generated is classified as real estate income and may benefit from the reduction established under Article 23.2 of the Personal Income Tax Law (IRPF).

Which Reduction Applies?

Where a rental arrangement does not meet specific requirements—such as being located in a stressed housing market area, being rented to young tenants between the ages of 18 and 35, or involving a recently renovated property—the general 50% reduction applies.

According to the DGT, this is the reduction applicable to room rentals used as a tenant’s primary residence.

Primary Residence as a Key Requirement

One of the most important aspects highlighted in the consultation is that the rented room must genuinely be used as the tenant’s primary residence.

It is not enough for the lease agreement to state this purpose; there must be evidence demonstrating that the tenant resides in the room on a permanent basis.

This type of use must be clearly distinguished from seasonal or tourist rentals, which do not qualify for the reduction.

The tax authorities may require supporting evidence, such as municipal registration certificates (empadronamiento), the duration of the lease agreement, or utility bills demonstrating effective residence.

The Importance of Proper Tax Reporting

The DGT also reminds taxpayers that this reduction is only available when the rental income has been correctly reported in the taxpayer’s personal income tax return and before any tax verification or audit procedure has commenced.

If undeclared income or improperly deducted expenses are identified, the reduction will be denied, even if the taxpayer subsequently regularizes the situation voluntarily.

The DGT notes that this measure may encourage more landlords to properly declare their rental income and benefit from the corresponding tax relief, thereby reducing their overall tax burden.

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