Property to rent in Spain: Tax implications and recommendations

Last updated on March 31st, 2020 at 10:24 am.

Everybody knows that Spain is a fantastic place to live and work. The combination of great weather, food and lifestyle make it a very attractive country to move to. Many people who think about moving to Spain are not ready to make that move permanent. These people may consider looking for property to rent in Spain instead of purchasing, giving you the perfect investment opportunity on your property.

However, if you are thinking about property to rent in Spain, then make sure you know all of the laws and regulations first.

Who will be living there?

It is essential that the Spanish authorities are aware of exactly who is living at the property. The Guardia Civil and Policia Nacional will need to know the identities of every occupant over the age of 16. They will need to know these particulars of each resident :

• First name and surname
• Passport or ID document number
• Date of Birth
• Sex
• Nationality
• Date of beginning of tenancy

Further to this, the authorities will require you to provide your own details, as the landlord or manager. Expect to provide similar details and to have all forms signed by another responsible person.

How should non-residents pay rental tax?

Non-residents that rent out their property in Spain are required to make tax declarations every quarter. The dates for these quarters are as so:

• 1st Quarter (January, February, March) tax payable before 20th April
• 2nd Quarter (April, May, June) tax payable before 20th July
• 3rd Quarter (July, August, September) tax payable before 20th October
• 4th Quarter (October, November, December) tax payable before 20th January

Each tax declaration needs to be completed before the 15th of the appropriate month. The Tax Office will charge your account on the following 20th. To provide an accurate tax return, it will need to be complete with the following information:

• The names of the tenants
• Dates of occupancy
• The rent paid
• Costs incurred related to tenancy (if you are resident within the EU, Norway or Iceland)
• The rate for the rental income tax is 19% in 2019 for residents within the EU, Norway or Iceland. For residents of other countries the rate of tax on gross income is 24%

To ensure that this process runs as smoothly as possible, consider hiring a tax adviser like Ábaco. The benefit of an independent tax adviser is that they offer guarantees that tax returns are submitted correctly and timely.

What if you are resident?

A resident earning income on a second property should declare their earnings in their annual income tax declaration. This is made before June each year.

Accounting for expenses

Any resident of a country within the EU, Norway and Iceland who lets a property in Spain can claim expenses. This happens regardless of whether they are resident in Spain. The costs associated with home rentals that you can claim back are:

• Council taxes
• Utilities
• Home insurance
• Interest paid on mortgages
• Legal fees
• Maintenance

Ensure that you keep an accurate record of these expenses, as the bills can soon add up. Therefore, you do not want to miss out on what you can claim back due to confusion.

Great investment opportunity

Property to rent in Spain is a remarkable opportunity to earn significant returns on your assets. The rental market is always in demand; people will always need a place to live or stay on holiday. Taking advantage of the demand is a great way to make some money. However, you must make sure that you adhere to all the laws and regulations set by the government.