Are you a non resident who owns a holiday home in Spain which you rent out? What do you know about the taxation of rental properties?
The rental income of non Spanish residents should be declared in Spain. Even it is properly declared in the country where you are tax resident. (E.g. the UK which does expect its residents to declare any income from holiday rentals).
There is a special form for non resident Spanish property owners. The rent should be declared on one of these forms every time some is received. Alternatively you can group all the rentals from a quarter together. E.g. 1st April – 30th June and declare on one form.
Deductible Expenses
If you jointly own the rental property with someone else (e.g. your spouse) both must submit forms. The names and NIE numbers of the people who rented the property should be included. There are no deductible expenses for this type of income for non residents. Forms must be in 15 days after the quarter end.
Part time Rentals
If the property is only rented out for part of the year. Maybe even only a few weeks in the summer, then the rent must be declared in the manner described above. But the period during which there is no rental is also subject to a separate tax. This is non resident tax that all holiday home owners who don’t rent out their properties face.
Double Taxation
Regarding Taxation of Rental properties please note that UK taxpayers who declare the income on both their Spanish and UK tax returns can make a double tax claim. This is to prevent them being taxed twice. This is made on the UK return and is equal to the Spanish tax paid or the UK tax liability whichever is the smaller.
Are you a Spanish tax resident who rent out a property other than their home?
If you have a property you rent out in Spain and live in Spain yourself you will have to declare the income on your Spanish tax return. This is the declaracion de la renta de las personas fisicas every year. In the May-June period following the year of the rental i.e. in arrears.
Residents
– there are some deductible expenses allowed.
Taxation of Rental Properties – Spanish tax residents (own property)
Many people settling in Spain make extra money by running a holiday rental business based in their own property. The tax rules are more or less the same as those described above. That is rent from short term tourist lettings is treated much the same way as long term lets. There are one or two points to consider:
– any claims for expenses must relate solely to the rental. You cannot rent out a granny annex for a few weeks and subsequently claim every item of household expense for the entire year. In fact if you live in the property it will be very hard to claim anything for utilities or rates for example. As these would have been payable anyway as you live there and you are not allowed to start apportioning bills.
– other issues can arise when the rental turns into a business. For example if you begin running a holiday business from your property. So it involves more than just renting out accommodation then you should register as self-employed. There is a grey area between renting out and running a business. But the distinction is usually made on the basis of what extras are included for the renter. If they just receive a room then clearly you are just the landlord renting out space. If they are offered services over and above this like food or leisure/educational activities. Then you are probably running a business. A lot has happened in recent years on these issues with tourist licences etc and you should speak to us for up to date information.
Please contact us if you would like to do so.