Get your property rental ready

Taxes Monday, July 30, 2018
Get your property rental ready

Rental property is in demand and many investors are making their money work for them by purchasing property to rent. It’s important that if you do, you take the time to ensure that legal requirements are met. In this article Susan Partridge from our Fiscal Department explains what these are and how you can comply.

Perhaps you have some cash to spare and would like to use it. With interest rates as they are, many people prefer to invest in something rather than keep their money in a savings account. Buying a property for rental has become a popular investment choice. There is plenty of demand both for tourist rentals and for people who want to rent long term. The ways in which you can advertise your property have also increased. Online alternatives, such as Airbnb, have become a popular alternative that makes renting out your property even easier.

However, there are some rules and regulations when it comes to renting out your property and you should familiarise yourself with these before taking the decision to rent.

Who is staying there

You must let the Guardia Civil or Policia Nacional know who is occupying your rented property. If an agency handles your rental then they should do this as a matter of course. The Spanish police need to know the identity of every occupant over the age of 16 years old who is renting out property in Spain.

You should let them know the details of each tenant including:

  • First name and surname
  • Identity document reference
  • Date of birth
  • Sex
  • Nationality
  • Date of occupation

You also need to include your own details including ID, name and surname of the owner or manager of the property. The form must be signed by the responsible person.

Paying rental tax: non-residents

When you rent out property in Spain as a non-resident you are required to declare your rental income on form 210 every quarter. The quarters are:

  • 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

Your declaration has to be made before the 15th and the Tax Office charge your bank account on the 20th. There is an extra charge for this service of €50 each quarter which is tax deductible.

Each quarter you must submit:

  • the names of the tenants
  • dates of occupancy
  • the amount paid
  • costs incurred (if you are resident within the EU, Norway or Island)
  • the rate for the rental income tax is 19% in 2019 for residents within the EU, Norway or Island and 24% on the gross income for residents outside these areas.

Of course, a tax adviser, such as Ábaco can help you with this process and ensure that the correct information is submitted each time.

Paying rental tax: residents

If you are a resident who is declaring income on a second property then you should declare it in your annual income tax declaration which is made before the end of June.

Deducting for expenses

The good news about rental income tax is that both residents and non-residents of Spain can claim expenses against any income that’s been earned. This is provided you live in a country that is a member of the EU community, Norway or Island.

Costs that can be deducted include:

  • council tax
  • community charge
  • utilities
  • house insurance
  • mortgage interest
  • legal costs
  • cleaning and laundry

You should set up a system for keeping record of these expenses. They can soon mount up and make a difference to your tax bill each quarter.

It makes sense

Renting out your property is a good option that means you can earn from your Spanish property either on a temporary bases or as a permanent investment. Either way, just make sure you have fulfilled your legal obligations and enjoy that extra bit of cash your property can provide.

Do you have any questions?

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Thank you for your information. However, perhaps it would be a good idea also to inform would-be homeowners keen on renting out, that there are always risks involved with renting out the properties. Your apartment or house could be damaged. In hindsight of what we have experienced we will never more rent out our property.
1. The firm letting out our apartment didn't make sure that the electricity and water were shut off. If there had been a water leak during the six weeks that the apartment stood empty the result would have been disastrous
2. Things were stolen, like new bath towels and sheets
3. All the dry food we had left for the tenants to use was gone - and not replaced
3. Lounge furniture was damaged
4. According to neighbors, tenants ignored to roll up the awning - even on windy days
5. The laundry was not cleaned and back until more than a month after the last tenant.
6. The light was still on in some rooms

Best regards
Karin Branzell

hi I read your article about rental property -- can I ask - we own our property jointly - are your fees of 45 euros for both tax returns or per tax return please? The article said your fees were tax deductible - I have been told that accountants fees are not directly related to the rental income and cannot be claimed?
Your list of expenses didn't include repairs which can be the most costly item - is there a reason for this? I have been told that repairs must be offset first against income before any other expenses and only if there is an excess - can they be carried forward. This means all the other costs are wasted, which cant be carried forward. I would be grateful for your comments please.

Hi Sue

Our fee is a flat rate of €45, as it is just for the rental tax declaration it can be deducted. However, the annual fiscal fee can not. 

Repairs can only be included if they have accrued while the tenant is in the property and the tenant would have to leave if they are not completed. This does not include general wear and tear or if they are covered under the landlord's insurance for rental properties. They have to be included in the quarter where they accrued. 

I was told that you could not deduct any expenses... Not even the agent's commission for handling the reservations. This is for summer holiday rentals, not all year round. Is this correct?

Thank you very much

Hi Michelle

If you reside outside of the EEC then the tax is 24% with no deductions for costs, inside the EEC it's 19% less costs. 

Once the uk decides on brexit and leaves the EU then
Does that mean uk residents renting in spain wil not be able to claim back the
Community charges etc etc

That is correct. You will pay 24% on the gross. 

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