The Balearic Government, concerned by the level of rent increases that around 25,000 tenants could be faced with in 2026, is in a rush to pass legislation that will offer owners tax incentives to either not raise rents at all or keep the increases to more than the current rate of inflation.
It is understood that a basic condition for a tax break will be that any increases do not exceed the Consumer Price Index. Initial estimates from the finance ministry indicate that, combined with other rent-related tax breaks already approved, landlords could save an average of around €2,000. The government wants to ensure that incentives are sufficiently attractive in order to keep increases to no more than inflation.
An issue the government has is how to proceed with the legislation. The budget bill for 2026 is not completely dead in the water as it may be possible to pass it retroactively (if the Partido Popular can somehow manage to persuade Vox), but for now this does not provide an opportunity.
The incentive will therefore have to be approved through a PP amendment to the first bill being processed by the Balearic Parliament. This happens to be legislation related to yacht clubs. While this may not have anything to do with this incentive, it would be a procedure that has been used in the past and is available to the government. If this bill is chosen, all parliamentary groups would need to give their agreement.
The deduction will be applicable to next year's income tax return, and will therefore relate to all contracts renewed from the first of January, even if the measure is approved later by parliament. The government can decree the measure for subsequent approval.