Letting rooms in your main home: a Balearic court keeps the IRPF main-home exemption - what the ruling says and what it does not change

Published 18 August 2026 · Updated 13 September 2026

Corrected on 13 September 2026. An earlier version of this article did not name the court, described the ruling as being about the reduction landlords apply to rental income, told landlords under a tax audit that the ruling strengthened their position, and stated a flat 60 percent reduction that no longer applies to contracts signed from 26 May 2023. The ruling concerns the main-home exemption on selling a home. The article has been rewritten.

What the court decided

On 10 June 2026 the Tribunal Superior de Justicia (TSJ) of the Balearic Islands ruled in favour of a homeowner in Calvià, Mallorca, who had let rooms in her own home by the season (appeal 110/2024). When she sold the home in 2017 she applied the exemption for reinvesting the proceeds of a main home. The Agencia Tributaria refused it in full, and the regional economic-administrative tribunal (TEAR) of the Balearic Islands agreed. Both said the home she sold was not her main home, because she had declared rental income from it, and both found her other evidence insufficient.

The TSJ disagreed and allowed the exemption in full, including the part of the gain that related to the rooms she had let. The ruling was reported by tax lawyer José María Salcedo in idealista/news on 22 July 2026.

What the court looked at

• What was let. The contracts were for individual rooms in shared accommodation, by the season, not for the whole home. The court found that compatible with the home still being her main home.
• Padrón registration. She was registered on the padrón at the address.
• No other home. The tax office could not point to any other home she owned or used.
• Utility bills. Consumption was almost constant throughout the year, including winter, when seasonal lets are least likely. The court read that as the owner herself living there.

What the tax office still says

The Dirección General de Tributos (DGT), the department of the Ministry of Finance that answers taxpayers' queries on how tax law applies, takes the view that letting your main home is not compatible with it remaining your main home. In its answer V1036-26 of 7 May 2026 it said that using a home for holiday lets removes its main-home status from the date the letting began. In an older answer, V2770-18, about a home where part had been let by the season, it said that if the home is sold within three years of the last letting ending, the over-65 exemption applies only to the part the owner used privately.

A TSJ ruling decides one case on its own facts in one region, and it does not change the DGT's published criteria. What it shows is that a court weighed the owner's evidence of living in the home rather than treating rental income as proof that the home had stopped being her main home.

Which tax benefits depend on a home being your main home

Under the IRPF law (Ley 35/2006), two exemptions on selling a home depend on it being your main home (vivienda habitual):

• Reinvestment exemption (article 38.1). The gain on selling your main home is not taxed if the full amount you receive is reinvested in a new main home, under the conditions set by regulation. If you reinvest only part, only the matching proportion of the gain is exempt.
• Over-65 exemption (article 33.4.b). The gain on selling your main home is exempt if you are over 65, or if you are in a situation of severe or great dependency.

For both, the law treats a home as your main home when you have lived in it continuously for three years (additional provision 23). A home can count before the three years are up when circumstances require a move, such as marriage, separation, a job transfer or a first or better job.

The IRPF law applies throughout Spain except in the Basque Country and Navarre, which have their own tax regimes, so these rules are the same in Andalucia as in the Balearic Islands. IRPF is paid by people whose habitual residence is in Spain; non-residents are taxed on their Spanish income under non-resident income tax (IRNR), a separate tax with its own rules.

If you live in your home and let it for part of the year

The ruling turned on evidence. If you let rooms, or the whole home, for part of the year while it stays your main home, keep the records the court relied on:

• Padrón registration at the address.
• Utility bills that show you living there across the year.
• Letting contracts that show what was let, a room or the whole home, and for which dates.
• Evidence that you had no other home you lived in.

Declare the rental income in your IRPF return for every year you let. If the tax office later refuses a main-home exemption only because the home produced rental income, this ruling is an argument to raise on appeal. A tax adviser can tell you how closely your facts match the ones the court accepted.

How the rental income itself is taxed in 2026

The ruling does not change how rental income is taxed. Article 23.2 of the IRPF law, as amended by the housing law (Ley 12/2023), sets these reductions on positive net income from letting a home, for contracts signed from 26 May 2023 and in force since 1 January 2024:

• 90 percent when the same landlord signs a new contract for a home in a declared stressed residential market area (zona de mercado residencial tensionado) at a starting rent more than 5 percent below the last rent under the previous contract for that home.
• 70 percent when a home in a stressed area is let for the first time to a tenant aged 18 to 35, or when the home is let to a public body or qualifying non-profit that uses it for social rent below the limit set by the state housing plan's rental aid programme or to house people in economic vulnerability, or when the home is under a public housing programme that caps the rent.
• 60 percent when the home was renovated, on the terms set in the IRPF regulation, with the works finished in the two years before the contract was signed.
• 50 percent in any other case.

The conditions must be met when the contract is signed, and the reduction applies while they continue to be met. Stressed areas are the ones listed in a resolution of the housing ministry.

Three limits apply to every reduction:

• It applies only to net income you calculated in a return filed before the tax office opened a verification, a limited check or an inspection covering that income.
• It never applies to income you left out, or expenses you wrongly deducted, that the tax office then corrects in one of those procedures, even if you accept the correction.
• It does not apply to a contract that breaks article 17.6 of the tenancy law (Ley de Arrendamientos Urbanos), which caps the starting rent of a new contract for a home in a declared stressed area.

An audit is therefore not the time to claim a reduction for the first time. Claim it in the return itself.

Expenses you can deduct from rental income

Article 23.1 of the IRPF law lets you deduct the expenses needed to earn the rent, including:

• Interest on loans used to buy or improve the home, plus repair and maintenance costs. Together these cannot exceed the rental income from that home for the year; any excess can be deducted over the next four years.
• Local and regional taxes and surcharges, and state fees and surcharges, on the home or the rent, such as IBI, provided they are not penalties.
• Amounts paid to third parties for personal services, such as a letting agent or property manager.
• Depreciation of up to 3 percent a year on the higher of the purchase cost or the cadastral value, excluding the value of the land.

FAQ

Q - Does this ruling mean I can let my home to holiday guests and keep the main-home exemption?

A - Not automatically. The case concerned rooms let by the season, with evidence that the owner lived in the home all year. The DGT still holds that holiday letting ends a home's main-home status, so expect the tax office to apply that view and be ready to prove you kept living there.

Q - Does it change the reduction on my rental income?

A - No. The reduction is set by article 23.2 of the IRPF law. For contracts signed from 26 May 2023 it is 50 percent unless one of the 60, 70 or 90 percent cases applies.

Q - I am not a Spanish tax resident. Does this apply to me?

A - The exemptions discussed here are IRPF rules, and IRPF is paid by people whose habitual residence is in Spain. Non-residents are taxed on their Spanish income under non-resident income tax (IRNR), a separate tax with its own rules. Check your position with a tax adviser.

Q - Where can I read the ruling?

A - It is a judgment of the TSJ of the Balearic Islands of 10 June 2026, appeal 110/2024. We could not find it in CENDOJ, the judiciary's public database of judgments, when this article was corrected, so the facts above are as reported by idealista/news. A tax adviser or lawyer can obtain the full text.

Sources

• Ley 35/2006 del IRPF, consolidated text on the BOE - articles 4, 8, 23, 33.4 and 38, and additional provision 23
• Ley 29/1994 de Arrendamientos Urbanos, consolidated text on the BOE - article 17.6
• idealista/news, 22 July 2026 - report on the TSJ Baleares ruling of 10 June 2026
• Agencia Tributaria - IRPF guidance and forms