Long-Term vs. Short-Term? Valencia Tax Comparison 2025
If you own a property in Valencia, you’ve likely asked yourself: Is it more profitable to rent to digital nomads for a few months or find a long-term tenant?
By the end of 2025, the answer no longer depends just on the monthly rent, but on how much the Tax Agency lets you keep. Taxation has become the deciding factor. In this Cabanyal Estate guide, we break down the real differences so you can choose the model that best protects your investment.
1. Long-Term Rental: The Fiscal "Safe Haven"
This is the traditional contract (LAU). For the 2025 fiscal year, this option offers the most protection for owners due to powerful deductions on net profit.
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Income Tax Reductions: You can reduce your taxable base by 50% up to 90% (if the tenant is young or if you have lowered the price in a "stressed zone").
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Deductible Expenses: You can deduct 100% of annual costs (Property Tax/IBI, insurance, community fees, and Cabanyal Estate’s management fees).
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VAT: Exempt. No need for quarterly VAT filings.
2. Temporary and Tourist Rentals: Higher Income, Higher Taxes
This includes holiday lets and mid-term rentals (1–11 months for students or displaced workers).
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Tax Reductions: Zero. You are taxed on 100% of your net profit.
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Pro-rated Deductions: If your property was only occupied for 200 days, you can only deduct costs (like IBI) for those 200 days.
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Non-EU Owners (UK, US, etc.): Great news for 2025! Thanks to a landmark court ruling in July, you can now deduct expenses just like EU residents, significantly improving your net ROI.
3. Real Comparison: Practical Case in Valencia 2025
Imagine a flat in El Cabanyal with a net profit (after expenses) of €12,000 per year.
| Concept | Long-Term Rental (Tenant < 35 y.o.) | Temporary / Tourist Rental |
| Net Profit | €12,000 | €12,000 |
| Applicable Reduction | -70% (€8,400 exempt) | 0% |
| Taxable Base | €3,600 | €12,000 |
| Estimated Tax (approx. 19%) | €684 | €2,280 |
Conclusion: The long-term owner saves €1,596 in taxes.
4. The scenario in Valencia for 2026
Valencia is undergoing significant regulatory change. Restrictions on tourist apartments (VUT) and the possible declaration of high-demand areas make medium-term rentals (1 to 11 months) very attractive due to their flexibility, but remember: in the eyes of the tax authorities, monthly rentals are NOT considered primary residences and do not qualify for the 50-90% tax breaks.
Which model is best for you?
At Cabanyal Estate, we carry out personalised profitability studies for our clients. We don't just look at the market price, but also the impact on your pocket after passing through the tax office filter.
