Permanent tax relief for more than 1.5 million landlords who declare income from rental is being planned by the Ministry of National Economy and Finance, attempting to achieve three goals in one move: Less tax for small landlords, more legitimate income tax returns and a greater supply of homes for rent.

At the center are two key changes that, if implemented, promise relief of up to €1,700 a year for those declaring rental income.

The first change sees a reduction in the current introductory tax rate from 15% to 5% for income up to €5,000, with the 15% rate maintained from €5,001 to €12,000. So a landlord declaring 5,000 euros from rentals will see the tax reduced from 750 euros to 250 euros – a net benefit of 500 euros. Similarly, for 12,000 euros of income, the tax falls from 1,800 euros to 1,300 euros, and for 20,000 euros the relief is 500 euros (4,600 today, 4,100 under the new scenario).

The ministry is betting that applying a 5% rate – as is the case for dividends – will lead to an explosive increase in declarations, as happened in the case of corporate profits. It is no coincidence that 9 out of 10 landlords declare an annual income of less than €10,000, so the new regime is aimed at the vast majority of taxpayers.

The second scenario envisages the creation of a new intermediate rate of 20% for the income segment from 12,001 to 20,000 euros, in order to avoid the abrupt transition from 15% to 35% currently in force, which acts as a deterrent to declaring the actual amounts.

For example, currently someone with 35,000 euros from rentals pays 9,850 euros in tax (1,800 for the first 12,000 and 8,050 for the remaining 23,000 at 35%). With the introduction of 20% in the intermediate bracket, the tax is limited to 8,150 euros – a difference of 1,700 euros per year.

Some examples:

Reduction of the rate from 15% to 5% for the first 5,000 euros

Owner with an income of 5,000 euros:

• Currently paying 750 euros (15%)
• With the new 5% rate he pays 250 euros
• Benefit: 500 euros

Owner with an income of 12,000 euros:

• Today: 12,000 × 15% = 1,800 euros
• With the new scenario:
• 5,000 × 5% = 250 euros
• 7,000 × 15% = 1,050 euros
• – Total: EUR 1,300
• – Savings: EUR 500

Adoption of an intermediate rate of 20% from 12,001 to 20,000 euros

• Owner with an income of 20,000 euros:
• – Today:
• 12,000 × 15% = 1,800 euros
• 8,000 × 35% = 2,800 euros
• – Total: EUR 4,600
• – At an intermediate rate:
• 5,000 × 5% = 250 euros
• 7,000 × 15% = EUR 1,050
• 8,000 × 20% = 1,600 euros
• – Total: EUR 2 900
• – Benefit: EUR 1,700

• –Owner with an income of 35,000 euros:
• – Today:
• 12,000 × 15% = 1,800 euros
• 23,000 × 35% = 8,050 euros
• – Total: EUR 9,850
• – Under the new system:
• 5,000 × 5% = 250 euros
• 7,000 × 15% = EUR 1,050
• 8,000 × 20% = 1,600 euros
• 8,000 × 20% = 1,600 euros
• 15,000 × 35% = EUR 5,250
• – Total: EUR 8 150
• – Benefit: EUR 1,700

According to the latest data from the AADE, rental income was declared in 1,758,055 tax returns for 2024, with the total amount declared amounting to 8.53 billion euros.

In detail, the breakdown of declarations and amounts by income bracket is as follows:

– Up to €5,000: 1,248,445 declarations, with a total amount of €2.042 billion

– From €5,001 to €10,000: 285,771 declarations, with a total amount of €2.008 billion

– From EUR 10 001 to EUR 20 000: 157 780 declarations, amounting to EUR 2,149 billion

– From EUR 20 001 to EUR 50 000: 57 658 declarations, amounting to EUR 1,652 billion

– Above €50,001: 8,401 declarations, for a total amount of €678.4 million