Many people who own a second home in Marbella look to obtain a rental income, either to help defray costs on their holiday home or as part of their investment strategy. This, of course, leads to a tax liability, whether or not the property owner is tax resident in Spain. It also applies to people who rent out just a part of their property, such as an annexe.
Residents and non-residents are treated differently by the Spanish authorities. An important point to note for non-residents is that any rental income should be declared to the tax man within 30 days of it being received, although if your property is booked for several months at a time quarterly tax declarations are acceptable.
Tax deductions in Spain
Non-residents are charged 24 per cent tax on profits and do not benefit from the 50 per cent reduction tax resident landlords are able to claim. However, there are some deductions that can be made—for example community fees and the IBI local rates—we would recommend you check with your accountant or gestor to see what can be claimed.
If you are a joint owner of the property then the other owner, for example your spouse, should also make a declaration. People tax resident in some countries—the UK for example—will also need to declare this income to their home tax authorities, although in this case due to a double taxation treaty they shouldn’t have to pay twice.
Another thing to bear in mind is the need for a fiscal representative in this country if, as a non-resident, you own two or more properties in Spain. Failure to appoint one to act on your behalf can lead to fines of up to €5,000. If you have just one property in Spain it is no longer a requirement.
Declaring rental income for tax in Spain
People who are tax resident in Spain must include any rental income on their annual income tax declaration (Declaración de la renta de las personas físicas). You will be able to claim relief for expenses including utility bills, advertising, community fees, IBI and interest, as well as amortisation on any mortgage you have taken out on the property. In addition, if you rent the property out as a private holiday home rather than as a business (Apartamento Turistico or Casa Rural) you are entitled to a 50 per cent tax deduction.
Owners should always seek professional advice before renting out their properties to ensure they fully understand what tax liabilities they will have.
Pure Living Properties offers a full range of property management services and we can organise and take care of any rentals should you be considering letting your property out. Please contact us for a consultation should you have any queries.
Javier is the founder and CEO of Pure Living Properties. Born and raised in Marbella in an entrepreneurial family who settled on the Costa del Sol in the 1960s, when Marbella’s real estate and tourism industry was just a fledgling market, Javier is an expert connoisseur of Puente Romano, which he calls home, and the Golden Mile, but also of the best areas, projects and companies, as their owners and developers have been among his inner circle since childhood.