Personal Income Tax Guide 2025: Maximise your deductions for rent in Valencia before the end of the year

We are closing the 2025 tax year and, for homeowners in Valencia, this year marks a before and after. With the Housing Law fully consolidated and new court rulings in favour of foreign owners, it is time to review your tax strategy before the Income Tax campaign begins in 2026.

At Cabanyal Estate, we want your investment in the neighbourhood or centre of Valencia to be as efficient as possible. Here's everything you need to know to pay only what is fair.

1. The big news of 2025: Non-resident owners (Outside the EU)

If you're an investor from the US, UK, China, or any country outside the European Union, 2025 has been a historic year. Thanks to a ruling by the National Court in July 2025, non-resident landlords now have the right to deduct expenses from their rent, eliminating the discrimination that existed against EU residents.

Before: You paid 24% on gross income (without being able to subtract expenses).
Now: You can subtract IBI, community and our management fees, paying only for the net profit.

2. How much can you deduct on your long-term rental?

For primary residence contracts, the discounts on net income for this financial year 2025 are divided into four very clear brackets. The aim is to encourage affordable renting and young people:

Reduction Percentage	Owner Requirement
90% reduction	If the property is in a stressed area and you have lowered the rent by 5% compared to the previous contract.
70% reduction	If you rent for the first time to young people (18-35 years old) in Valencia.
60% reduction	If you have carried out renovation or energy improvement works in the last 2 years.
50% reduction	General reduction for any primary residence contract signed after May 2023.

3. Expenses that "expire" on December 31

You have until the last day of the year to make certain payments that will reduce your 2025 tax bill. Make sure you have the invoices for:

Cabanyal Estate fees: Remember that the invoices for the search for tenants or the monthly management of your property are 100% deductible.
Non-Payment and Home Insurance: If you have not yet renewed it, doing so before the end of the year allows you to include it in this exercise.
Maintenance: Small repairs, painting or overhauls carried out in 2025 are directly subtracted from your income.
Utilities: If you pay for your tenants' electricity, water or Wi-Fi, keep all the receipts.

4. Temporary vs. regular rental in Valencia

It is important to distinguish. In Valencia, medium-term (temporary) rentals are on the rise, but their taxation is different:

Regular rent: You are entitled to reductions of 50-90%.
Temporary/holiday rental: You are not entitled to these reductions. You are taxed at 100% of the net profit.

Expert tip: If you are looking for tax returns, long-term rentals to young people in neighbourhoods such as El Cabanyal is currently one of the most attractive options thanks to the 70% reduction.

Are you hesitant about your 2025 return?

At Cabanyal Estate we not only help you find the ideal tenant; we advise you so that your real profitability (after taxes) is as high as possible.

Do you have an empty property or do you want to change your rental model? Talk to us before the end of the year and let's optimise your investment together.