More and more foreigners are enjoying their second home in Spain… and also those who decide to make the most of it by renting it out during the months when they are not in Spain.
Even with the summer already started, we know of some clients who have decided to rent their property in Spain during the months of July and August.
Renting a property on a weekly or daily basis to tourists is an increasingly common practice, but we should not forget or not know that there is a part that we cannot overlook and that can cause us more than one setback: taxes and the regulation of holiday rentals in Spain.
If this is your case or if you are considering it, we recommend you read this article prepared by the specialists at MAM Solicitors.
What is considered a ‘holiday rental’ in Spain?
In Spain, renting a property on a temporary basis to tourists is considered a holiday or tourist rental. But beware: the same regulations do not apply throughout the country. Each autonomous community (and even some municipalities) has its own rules.
Some regions require licences, others limit the number of days you can rent and almost all require you to register your property as a ‘tourist property’. If you have a property on the coast, for example in the Valencian Community, Andalucía or Cataluña, chances are that there is already a mandatory registration.
Check the requirements in your community before offering the property for rent.
It is also important to assess and take into account that, based on the latest legislative changes, since 3 April, in order to obtain a licence as a property with the possibility of tourist rental, the approval of the community of owners is required.
For this, 60% of the owners must vote in favour and if there is no approval and the activity is carried out, the community can demand its cessation.
If you already have the licence, this law does not affect such dwellings.
What taxes do I have to pay and declare if I use my property for holiday rentals?
The Spanish Tax Agency requires you to declare the income you earn from renting out your home, even if you live in another country.
Moreover, this provision applies whether you live in the EU or outside the EU.
You will have to pay tax on:
1.Rental income while your home is occupied.
2.An ‘imputed rent’ when the house is empty, i.e. when you are not renting it but it is still yours.
Regarding the amount to declare or pay during the rental months, we understand that the income is considered ‘real estate capital income’, and you can deduct some expenses:
- Mortgage interest (if you have one).
- IBI (Real Estate Tax).
- Community fees.
- Household insurance.
- Municipal taxes.
- Utilities (water, electricity, internet…).
- Promotion and management costs.
- Depreciation of the property (up to 3% of the cadastral value of construction).
However, you can only deduct the expenses proportional to the time that the property was rented.
This amount is added to your tax return.
Is taxation the same if we rent out our main residence instead of a second home?
Many homeowners rent out their primary residence while they are away in the summer.
Although this is legal in Spain, it is important to be aware of the following:
- The property remains your main residence (for example, if you go to your home country for a few weeks).
- You only rent it during your temporary absence.
- Do not provide hotel-type services (such as daily cleaning or meals), as this is considered an economic activity and the tax regime changes completely (you will have to register as a self-employed person and declare VAT).
One thing we would like to emphasise is that both intermediaries and companies that provide this type of rental are obliged to inform the tax authorities of all relevant data: duration of the rental, amounts charged, identification of owners and characteristics of the property, so that, although our residence is not in Spain, there is no option for the authorities not to be aware of the rental of our property.
