Investing in rental in Spain – the safe way

Last updated on October 24th, 2022 at 12:20 pm.

With poor interest rates and uncertainty around currencies, people with money to invest can often choose to purchase property to rent in Spain. It can be a good investment that provides you with a return on your capital now and the prospect of a home for yourself in the future. It is important, however, to ensure that you complete the necessary legalities and tax requirements.

Property in Spain represents good value and is in plentiful supply. Prices range from an affordable 50.000€ to more or less whatever you would like to pay. Of course, you must also add on the additional purchasing costs and taxes but you can still find property a fraction of what you would pay elsewhere and, with the right location, able to earn a monthly income for you.

Where to buy

Where you choose to buy your rental property is, of course, down to you and your short, medium and long-term intentions. If you would like to invest in a property suitable for short term holiday rentals, you will want to find one that is an attractive place for potential holiday makers.

Where you choose to buy your rental property is, of course, down to you and your short, medium and long-term intentions. If you would like to invest in a property suitable for short term holiday rentals, you will want to find one that is an attractive place for potential holiday makers.

Properties on the frontline of the coast can provide a very good income in the summer months but may not be as lucrative during the winter. Having said that, different nationalities do prefer different seasons and you can find that some northern Europeans are actually more interested in renting during the winter months.

A long-term let provides a consistent income over a period of time and means that you are not paying cleaning and preparation costs for new tenants. You can expect to get less, of course, but have the security of knowing that your property is rented out and you can apply a number of checks to your new tenant. Whichever option you go for, it is important that you comply with tax requirements.

Paying tax

Whether you are a resident or a non-resident, you have tax to pay on your rental income. If you are a resident then you will declare it as part of your quarterly tax submission if you are autonomo (self-employed) or through your annual tax declaration if not. If you are non-resident then you will make quarterly declarations according to the following dates.

• 1st Quarter (January, February, March) – to be paid before 20th April

• 2nd Quarter (April, May, June) – to be paid before 20th July

• 3rd Quarter (July, August, September) to be paid before 20th October

• 4th Quarter (October, November, December) to be paid before 20th January

The declaration must be completed before the 15th of the following month and the amount calculated must be paid before the 20th. The rate of income tax is 19% for non-residents who live within the EU, Norway or Iceland and 24% for non-residents living outside of these areas.

The good news is that against this income you can claim expenses if you are resident in a country within the EU, Norway or Iceland. Expenses that can be deducted include council taxes, utilities (where they are not paid by the tenant), home insurance, interest paid on mortgages, legal fees, community fees and maintenance. For maintenance you will need to have official invoices available.

Many countries have a double tax treaty with Spain and this agreement means that you will not be charged twice for the income you make. You will have to declare the income in Spain and pay the tax but once you have completed your declaration in your country of residence you can show that tax has been paid in Spain. This will then be deducted from the amount to pay in your own country.

Other requirements

Since July 2018 it has been a requirement that you must apply to rent out your property to tourists. A report will need to be completed on your property that approves it as compatible with your intention to rent it out. Once a favourable report is received then you can apply for your licence.

You can make the licence application in person or electronically if you have a digital signature. Once the registration is granted you will obtain a registration number that must be quoted when advertising your property for rent.

As a landlord you have the duty to inform the Spanish authorities about who is living in your property. You must keep the Guardia Civil and Policia Nacional informed of the identities of the people in the property who are over the age of 16. You will need to supply:

• First name and surname

• Passport or ID document number

• Date of birth

• Sex

• Nationality

• Date that the tenancy begins

You will also have to provide this information yourself for the authorities and have it confirmed by a responsible person. It is important that if you are embarking on renting out your property you do so following the correct procedures and regulations. Sanctions in Spain can be tough and not complying is a risk you don’t want to take.

If you would like more information about making your rental tax declarations, then we are happy to answer your questions and complete your tax returns on your behalf.