Renting out your property in Spain as a foreigner

For many years, most landlords renting out a property in Spain would be unaware of their tax obligations, regardless of their residence status. But once new laws for holiday rentals were passed, stricter controls started to be imposed on property owners. As a result, declaring rental income in the right way has become essential for anyone letting out a property in Spain.

The first thing to consider when renting out property in Spain is if it will be for a short or long period, since different regulations apply to each of these situations. In Spain, short-term rentals (“viviendas de uso turístico”) are only allowed for leisure and work purposes. In contrast, long-term rental contracts are meant for regular use and turning the property into a home. Whereas long-term rentals are subject to the Spanish national laws, different regional legislations apply to short-term contracts. Thus, whether your property is located in Andalusia, Valencia or Asturias will also play an important role.

How much tax will I pay for renting out my property in Spain?

The amount of tax you pay for letting out your property in Spain will mainly depend on your residential status. There are 3 possible scenarios:

  • Residents in Spain: property owners with Spanish residency declare their rental income as a part of their regular tax return (“IRPF”, “rendimiento de capital inmobiliario”). Regarding this, EU-residents (also EEA citizens) are entitled to the same deductions as Spanish citizens.
  • Non-resident Europeans: despite living abroad, any Europeans renting out a house in Spain have to pay foreign tax, also known as IRNR (“Impuesto sobre la Renta de No Residentes”). Property owners need to pay the net rent, in other words: income less expenses. These expenses can only be deducted if you can provide a certificate of fiscal residence in your home country (HMRC in the case of the UK). Some of the expenses that can be deducted are: tax property (IBI), home insurance, value depreciation of the house, community expenses, legal defense (lawyer), mortgage interests, maintenance and publicity expenses.
  • Non-EU, non-resident landlords: they need to pay the full tax, no deductions neither allowances are possible.

Taking all this into account, it appears that the outcome of Brexit will influence the tax burden of British citizens letting out their Spanish properties.

As for the current tax rates, these were the applicable percentages in 2020:

  • For EU and EEA residents: 19% tax
  • Rest of the world: 24% tax (Non European members cannot deduct expenses, From 01-01-2021, the United Kingdom is considered a non member country)

Once ended the transition period, the United Kingdom is considered a non-member country and as an important new thing to be taken into account, from 01-01-2021 non resident British citizens in Spain that obtain incomes for renting their homes in Spanish territory will have to pay a tax of the 24%, besides, as non european community citizens they will also not be able to deduct their rental expenses, this means they will pay taxes for the gross income. Therefore, according to the tax payments for the rental incomes obtained in Spain as non residents, the U.K. leaving the E.U. is detrimental for them, raising their fiscal fee. The solution could be the signature of a new treaty between Spain and the U.K.

Non residents declare their rental revenue by filling in the 201 Form. For residents in Spain, it is the 100 Form.

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Applying for a licence to rent out Spanish property

Before you can start renting out your house or appartment, it will be necessary to obtain an official licence at the regional Tourism Registry. This means, among other procedures, filling out a “declaration of responsibility” and proving that you own the basic equipment, as for example:

  • a heating system in the rooms for the months from October to April
  • air conditioning from May to September
  • enabling a telephone number for the visitor to contact you
  • a first aid kit
  • ensuring proper cleaning, bedding and household items
  • having a complaints book
  • providing tourist information about the area
  • drinking water, Treatment and evacuation of waste water
  • electricity
  • register all guests older than 16 in a Traveller Record-book and informing the Police or Civil Guards depending on the location of the property.

Holiday lettings are officially declared using the 210 Form. This form is submitted quarterly, in the first 20 days of the month following the end of the quarter. If the property belongs to more than one person, each of them will need to file a copy of the form.  Form 210 requires you to provide the following details:

  • identify the owner or owners of the property and address
  • the full adress, including the cadastral reference
  • period of time for which the property will be rented out, including the number of days each month
  • rental price and means of payment plus expenses for utilities (gas, water, electricity, insurance, IBI tax property, publicity, etc. )

Moreover, you will have to provide your tax advisor with copy of the deeds of the house and property tax.

Tips For Managing Holiday Lettings in Spain

One of the most common issues when letting out a house is organising the handover of the keys. Finding a reliable neighbour who agrees to help you while you are away can save you many surprises. If you are planning to rent out your house while you are living outside Spain, you will need to find solutions for managing it efficiently. Many find it easier to buy property in a resort or group of apartments, which already has its own rental management. Although a bit more expensive, these resorts usually have their own English speaking staff, which can be of great help to potential visitors. As for the way you gain your visitors, being active on Internet platforms is probably the easiest way. Be fast answering your e-mail requests and build a good online reputation based on good reviews. However, word of mouth also plays an important role. If your guests are happy with their stay, they will be more than likely to tell their friends and bring you new visitors.

Tejada Solicitors is an English-speaking law firm based in Malaga and Costa del Sol, specialised in property conveyancing, inheritance tax, residence for foreigners, self-employed tax declarations and most legal and financial aspects of relevance to foreigners and expats living in Spain. For any questions and enquiries, don’t hesitate to contact us either by phone or e-mail.

The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.

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