More tax rebates to buy housing while prices continue to skyrocket

PalmaThe new fiscal measures of the Balearic Government regarding housing have now come into effect after the publication of the law in the BOIB. The Executive argues that the package should facilitate access to the purchase of the first home and encourage some rents to stop rising. The measure, however, arrives in a market where the main problem remains the starting price of flats and rents.

The housing crisis is today one of the major social conflicts in the Islands. Buying has become an increasingly distant option for many young people and families, while renting absorbs a growing portion of salaries. In this context, Marga Prohens' Government opts for tax relief, a path that can reduce part of the cost of the operation, but which does not directly lower the price of housing.

One of the main novelties is the increase in the maximum price of housing to access the exemptions from the property transfer tax, which is paid when buying a second-hand home. In Mallorca and Menorca, this limit is now set at 331,859 euros.

Those under 30 years of age and people with disabilities will be able to continue to benefit from a 100% exemption from this tax if they buy their first habitual residence. In the case of those under 36 years of age, large families, single-parent families, or families with dependent persons with disabilities, the exemption will be 50%.

The regulation also incorporates reductions in the tax on documented legal acts, linked to certain purchase and mortgage transactions. Those under 30 years of age and people with a disability equal to or greater than 33% will have a 100% exemption, while other beneficiary groups will have a reduced rate of 0.5%.

In addition, a 50% exemption is foreseen for the purchase of limited-price housing, a formula that the Government wants to promote as an alternative in an increasingly strained residential market.

Incentives to freeze rents

Regarding rent, the law creates a regional deduction for small landlords who renew contracts without raising prices or who, at most, update them according to the CPI. The deduction will be 50% of the net income obtained, with a maximum of 800 euros per year per dwelling and 2,000 euros per taxpayer. It can be applied from the 2026 tax year, in the declaration to be filed in 2027.

According to the Government, since July 2023, more than 5,000 young people and families have benefited from housing purchase bonuses, with a total saving of over 67 million euros. However, the real scope of the new measures will depend on how many people can actually afford to buy in a market with soaring prices.

The bonuses can alleviate the tax bill of a sale, but they leave out a significant portion of the population who do not even consider the operation. In a community marked by tourist pressure, the lack of residential supply, and the sustained increase in housing prices, the debate continues to be whether tax reductions are enough to face a crisis rooted in price and real access to a home.