The 10% VAT rate will extend to renovations of rented homes from 1 December

What changes and when

Royal Decree-Law 29/2026 extends the reduced 10% VAT rate to renovation and repair work on homes intended for habitual rental, regardless of the landlord’s status. Although the decree-law entered into force on 8 October, Article 7 makes this amendment effective from 1 December 2026. Therefore, as of 14 October, the reduced rate should not yet be treated as applicable.

The four requirements the work must meet

The home must be intended for rental as the tenant’s habitual residence; construction or its latest rehabilitation must have been completed at least two years before this work begins; materials supplied by the contractor may not exceed 40% of the taxable amount; and payment must be made by card, bank transfer, named cheque or deposit into the business or professional’s account. The extension covers habitual rental regardless of the landlord’s status.

What to request before accepting the quote

Ask for an itemised quote identifying labour and materials, the property address and the type of work. Keep the contract, invoice and banking proof, and document both the age of the building or latest rehabilitation and its intended use for habitual rental. If the work spans 1 December or involves advance payments, ask the contractor to confirm in writing the VAT treatment and the tax point.

A published rule, not a grant or proposal

This is not a subsidy or a draft awaiting publication: the decree-law appeared in the BOE on 7 October and generally entered into force on the 8th. However, the specific VAT amendment has the later date of 1 December. Before invoicing, check the consolidated BOE text and do not confuse renovation or repair work with a simple purchase of materials, furniture or equipment.

Sources consulted

• Royal Decree-Law 29/2026 of 6 October on housing and affordable supply · Published on 2026-10-07
• Law 37/1992 of 28 December on Value Added Tax (consolidated text) · Published on 1992-12-29