Major Changes in Income Tax for the Real Estate Market – Barreiro

Major Changes in Income Tax for the Real Estate Market: New Exemptions in Effect from 2026 Are Regulated

Through Decree 406/2026, the Government regulated the amendments introduced by Law 27.802 on Labor Modernization, bringing a significant change to the taxation of individuals and undivided estates involved in the real estate market.

What Did the Labor Modernization Law Change?

Law No. 27.802 established — effective for fiscal periods beginning on or after January 1, 2026 — that income derived from renting residential properties intended as a primary residence is exempt from Income Tax.

It also introduced an exemption for gains arising from the sale of real estate and the transfer of rights over real estate, covered under Section 99 of the Income Tax Law, for transactions carried out on or after January 1, 2026.

The Regulation

1. Exemption for Rentals of Residential Properties

The decree clarifies that:

“Primary residence” means the taxpayer’s sole, family, and permanently occupied dwelling. In this regard, it specifies that: (i) for purposes of the imputed rental value exemption, this designation refers to the taxpayer’s own home; and (ii) for purposes of the lease or sublease exemption, it refers to the tenant’s or subtenant’s home.
The exemption applies to all units rented by an individual or undivided estate, provided the effective use by the tenant or subtenant is residential.
The exemption also covers amounts collected for furniture, accessories, or services provided along with the property.
It applies to income accrued from January 1, 2026 onward, even if the lease agreement was entered into before that date.
It also covers the imputed rental value of properties transferred free of charge or at an undetermined price when the recipient uses them as a residence.

2. Exemption for the Sale of Real Estate

The new exemption added to Section 26(n) of the Income Tax Law is hereby regulated.

The exemption covers:

Individuals and undivided estates, whether resident or non-resident.
Gains from the sale of properties located in Argentina.
Transfers of rights over real estate under Section 99 of the law.
Transactions carried out on or after January 1, 2026.

It is further clarified that the exemption includes:

Sales as defined under Section 3 of the law.
Assignments of purchase agreements or similar commitments that involve the transfer of rights over real estate.

3. Limitation on the Deduction for Rental Payments on a Primary Residence

A regulatory clarification is introduced stating that the deduction provided under Section 204 of the regulations shall not apply where the landlord or co-owner is an individual or undivided estate, in the corresponding proportion.

The measure aims to reduce the tax burden on real estate transactions involving individuals, with potential impact on both the rental market and investment and property sale decisions.

It will be essential to analyze each specific case to verify compliance with the requirements established by the regulation and to properly take advantage of the benefits provided.