On July 22, 2025, the Spanish Congress of Deputies approved a bill amending Law 19/1994, of July 6, which regulates the Economic and Fiscal Regime of the Canary Islands (REF). This reform introduces a significant change: the possibility of applying the Canary Islands Investment Reserve (RIC) to properties intended for long-term residential rental.
The measure aims to encourage private investment in primary housing by offering substantial tax incentives. Companies and self-employed individuals will be able to reinvest their profits in the purchase, renovation, or construction of housing, with deductions of up to 90% in Corporate Tax or 80% in Personal Income Tax, provided the properties are leased for a minimum of five years.
Key Conditions for This New RIC Modality
The law sets out strict requirements to ensure that these investments genuinely contribute to increasing the housing supply in the Canary Islands:
- Real economic activity: The rental must qualify as an economic activity, requiring at least one full-time employee exclusively dedicated to it.
- New to the rental market: Properties must not have been rented in the 12 months prior to the investment.
- Tourist use excluded: Vacation or seasonal rentals are not permitted. Only long-term residential leases are allowed.
- Rental deadline: The property must be effectively rented within six months of acquisition or completion of construction/renovation.
- No personal or corporate ties: The landlord must not have any family or business relationship with the tenant.
- Minimum holding period: As with any RIC investment, the property must be held for at least five years.
Rent-to-Own: A New Opportunity for Tenants
As an innovative feature, the reform allows rental contracts to include a purchase option. This means that, after a minimum of five years of leasing, tenants may acquire the property at a pre-agreed price, facilitating access to homeownership.
Next Steps
Although the bill has been approved, the full text and its effective date are still pending publication in the Official State Gazette (BOE). Once published, a more detailed analysis will be possible to clarify its practical implementation.
We will continue to monitor legislative developments closely to provide updated information and personalized advice on how to take advantage of this new investment opportunity in the Canary Islands.
Carlos Manrique de Lara Correa
Lawyer en CABRERA RODRIGUEZ ETL GLOBAL
