Taxes on Holiday Rentals
The tax amount you pay for letting out your property in Spain will vary and depend on your residential status. There are 3 possible scenarios:
- Residents in Spain: property owners with legal residency in Spain 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 have the same deductions as Spanish citizens.
- Non-resident Europeans: Whether living abroad or not, any European person renting out a house in Spain has to pay foreign tax, also known as IRNR (“Impuesto sobre la Renta de No Residentes”). Property owners have to pay the net rent, in other words: incomes minus expenses. These expenses can only be deducted if you can provide a fiscal residence certificate in your home country .Some of the expenses that can be deducted are: tax property (IBI), home insurance, house value devaluation, community expenses, legal defense (lawyer), mortgage interests, maintenance and advertising expenses.
- Non-EU, non-resident landlords: they need to pay the full tax, no deductions neither allowances are considered.Taking all this into account, it seems that the outcome of Brexit will raise the tax burden of British citizens letting out their Spanish properties.
As for the current tax rates, these were the applicable percentages in 2019:
- For EU and EEA residents: 19% tax
- Rest of the world: 24% tax (Non European members cannot deduct expenses)
From 01-01-2021 British citizens, as citizens of a non E.U member state, will have to pay from the 19% to the 24% for the incomes they obtain for the rental of their properties in Spain. Besides, any kind of deduction related to rental expenses will not be possible, so their fiscal tax bill will be bigger, because they have to declare and pay for the gross income.
Non residents declare their rental revenue by filling in the 201 Form. For residents in Spain, the form is the 100.