New Tax Deduction Opportunity for Tenants: Deduct Up to 10% of Your Annual Rent from Your Taxable Income Starting in 2023.

Tenants will now have the opportunity to deduct up to 10% of the total annual rent paid for their property from their taxable income for the fiscal year 2023 and beyond. This benefit is outlined in AFIP Resolution 5521/2024, which was published this week in the Official Gazette. The resolution is a regulation of Law 27,737, which was approved by the previous government in October 2023.

The main objective of this deduction is to encourage tenants and landlords to register their rental contracts with the AFIP so that they can take advantage of it. Under Article 11 of Law 27,737, both tenants and landlords can make use of this deduction as clarified by tax specialist Marcelo Rodríguez.

For example, an employee who pays $350,000 in monthly rent can deduct a total of $420,000 annually from their taxable income. The potential savings can range from $63,000 to $147,000 per year depending on the individual’s tax rate. There is no limit to the deduction so those with higher rents can benefit even more.

It’s important for employees to report the deduction for 2023 rents by July 15, 2024 so that it can be considered in the annual tax settlement. After this deadline they will no longer be able to claim the deduction. Additionally, it is crucial that rental contract is registered with AFIP to qualify for this deduction as stressed by specialists Fernando López Chiesa and Florencia Iaciancio.