What taxes do I need to pay on my rental property in Spain?

In this post, we are going to explain what taxes need to be paid if you are going to rent your Spanish property. The rental market in Spain can be very lucrative, however, it is vital that correct taxes are paid to avoid unnecessary fines and implications – which can affect your profits! 

Every year, thousands of expats purchase Spanish property with the sole intention of renting it. A great investment opportunity as the rental market in Spain is always growing, so there is lots of money to be made. In the summer months, coastal towns and cities in Spain thrive with tourist rentals meaning landlords can charge lucrative rents.

Note: Property owners must declare the earnings obtained through rentals to tax authorities. 

What rental taxes do non-residents have to pay in Spain?

For residents, yearly IRPF tax must be paid.

For non-residents, quarterly IRNR (Impuesto. Sobre le Renta de No Residentes) tax must be paid and a local tax known as the Real Estate tax.

What are the rates of tax?

European citizens have to pay 19% of the profit obtained from rentals.

Non-European citizens have to pay 24% of the earnings.

Are there any tax deductions that can be made?

European citizens and Spanish residents are able to deduct the same expenses for short term rentals.

Certain deductions can be made for Spanish residents whose property is being rented out to an individual who is using the dwelling as their permanent home. 

Landlords who are not a resident in Spain or any other European country are not eligible for any tax deductions. Therefore, they are liable to pay taxes on the entire profit received from renting out their Spanish property.

What expenses for the property can be included in the tax return?

Any expense that obtains the rented property can be included in the tax return, including:

  • Cleaning fees.
  • Utility bills (e.g. electricity, gas).
  • Furniture.
  • Fees for advertising the property.
  • Community fees.
  • Home insurance.
  • Mortgages interest.
  • Council tax.
  • Property management fees.
  • Repair and maintenance expenses.

I share ownership of my rented property, how many tax returns need to be made?

If you share ownership of the property with one other person, or several other people, you must each make a separate tax return. In Spain, joint property owners are classed as independent taxpayers.

What if I don’t declare the rental income?

If you are caught renting your Spanish property without paying the appropriate taxes, you are liable to pay interest on the missed tax payments. Other fines can also be imposed by the Spanish treasury.

Do I need a license to rent out my property in Spain?

Yes, to advertise your property on an online rental platform in Spain you must have a RTA rental license.

Do I need a First Occupation License (Habitation Certificate) or Energy Efficiency Certificate for my property to rent it out?

Yes, you will need to obtain a Habitation Certificate and an Energy Efficiency Certificate for your Spanish property before you rent it out. Don’t have one? Find out more and apply for one now!

Over to you...

Now that you know a little more about what rental taxes must be paid on Spanish properties, we hope you understand how important it is to ensure you are paying the correct taxes.

For more information see –  Non-Resident Tax returns, Energy Efficiency Certificate and Habitation Certificates.

Our team of tax experts are here to help you with your Spanish taxes and any certificates you may require in order to rent out your property in Spain.

Please get in touch today for a free consultation by filing the form provided or call us on (0034) 96 682 11 72.

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