New codes that eliminate taxes for those who earned income from rentals in 2025 are included in the new E2 form, which approximately 3.5 million property owners will be required to submit to the Tax Authority this year. The regulations apply to landlords who opened vacant properties or converted short-term rentals to long-term leases, securing complete exemption from income tax on rental income they collect for three years.
Income from long-term and short-term rentals is pre-filled by the AADE, however taxpayers will be able to intervene in the codes and make corrections if the data collected by the AADE and recorded in the form is incorrect. Income from the E2 form is automatically transferred to the E1 form to be taxed from the first euro with rates starting from 15% and reaching up to 45%, while 5% of rental income is recognized by the Tax Authority as an expense for repair, maintenance, renovation and other operational needs of rental properties.
The E2 form also declares rental income that taxpayers failed to collect from tenants. When completing the E2, taxpayers must be particularly careful to avoid “traps” that increase their tax burden.
What taxpayers need to watch out for
Specifically, the points in the E2 that taxpayers need to pay attention to are:
– If a property is vacant for the entire tax year or for a specific period, it is recorded with the indication “VACANT” and the time period during which it remained vacant is also filled in.
– Column 4 declares the property category, specifically whether it is a Residence, Single-family Home, Professional Space, Plot, Warehouse, Parking Space, Car Station, Industrial Building, Hotel, Hospital, School, Sports Facility, Other Building (Theater, Cinema, Museum, etc.), Agricultural Plot, Other Use.
– Columns 13, 14 and 15 are filled with gross income from properties, while amounts from uncollected rents that were declared in previous tax years (2015–2024) and collected during tax year 2025 are also recorded.
– Column 16 declares uncollected rents, but for them not to be taxed, a payment order or lease return order or court decision for eviction or rent award must have been issued by the declaration deadline, or a related eviction or rent award lawsuit must have been filed, accompanied by proof of service, and the relevant documents must have been submitted to the competent tax office before filing the declaration.
– Column 17 declares the type of lease and property use.
– Code 64 declares the gross income earned by the landlord during 2025 from at least a three-year residential lease contract, provided this residence was vacant during 2022, 2023 and 2024. The income is transferred to new codes 119-120 in Table 6 of form E1 to be exempt from tax.
– Code 65 declares the gross income earned by the landlord in 2025 from at least a three-year residential lease contract, provided this residence was on short-term rental in 2024.
– Codes 66 and 67 concern residential leases of at least six months duration that had previously remained vacant or had been registered in the short-term rental registry. These are properties rented to specific categories of public sector workers, such as medical and nursing staff, public education teachers and uniformed personnel of the Armed Forces and Security Corps.
– Column 18 shows the nine-digit electricity supply number for each property, regardless of whether the supply is active or not. When there is no electricity supply or for a warehouse or parking space powered by a shared supply, the column is filled with the number “999999999”.
– Column 19 shows the number of the real estate rental information declaration.
