When you rent a property, you receive “rent” which is subject to Spanish “Income Tax” in Spain, which varies depending on whether you are a “Spanish tax resident” or “Spanish non-resident”.
If you are a resident, the tax to be considered is the Resident Income Tax (IRPF- “Personal Income Tax”), and if you are not a resident, the tax is the Resident Income Tax. Non-Residents (IRPFNR- “Income Tax for Non-Resident Individuals”).
If you are a “Spanish tax resident”, you must declare your rental income in our ANNUAL TAX statement (model 100).
But, if you are NOT a Tax Resident in Spain, you must declare your income in the Non-resident Income Tax (model 210) as follows:Â
1.- Taxes for NON Residents – MODEL 210
Owning a property in Spain implies determinate tax implications, let us detail the formalities to follow in relation to the rental activity of the property.
a) Property not rented during the year: Imputed Tax
- NON RESIDENT INDIVIDUALS: Non resident individuals (not Companies) owning properties in Spain must fulfill what is called the “Imputed Rental Tax” – Model 210. This tax applies to all properties which are not used as “permanent residence” (even for Spanish residents).
And, this tax is in application for all the time of the tax year in which the property has not been in rental activity.
- Tax Base: 2% of the Cadastral Value
- Tax Rate: 19% (for EU citizens) or 24% (for non-EU citizens)
Periodicity: Annual
- NON RESIDENT COMPANIES: Non resident companies owners of properties in Spain do not have to pay for this tax annually. They are exempted of this tax.
b) Property rented during the year – Rental Tax
In case the non resident owner (either individual or company) rent a property and receive an “income”, this must be declared and subjected to tax,  at the same time the income is received, or at the end of the year.
So, the Income Tax for the rent may be presented, MONTHLY, Â QUARTERLY OR ANNUALLY DECLARATION of the IRPF tax.
 The sole exception here is when you rent during the whole year to the same tenant (Permanent Residence Rent). In these cases, tax declarations may be presented annually.
 An example:
You are a non-resident and obtain rental income from a tourist property in February 2024 .
The rest of 2024 there is no more rental income on the property.
1.- Rental Tax : You may opt to declare that income in the same quarter. Submissions of these statements must be made no later than 20 days after the end of the quarter. In the case of the example, the rental income for the January-March quarter, must be declared in the tax returns that must be filed before April 20, 2024 .
 2.- Imputed Tax for individuals: Before the end of the following year, 2024, you must present the tax declaration and pay for the time that the property has not been rented.
**Note: In case you are a company, then, you do not have to present the yearly Imputed Tax declaration.
Therefore, keep in mind that, when renting a property for, and this is done for short-term rental (tourist or seasonal rent), along with determinate LEGAL registrations and formalities related to the activity, Â you have a FISCAL OBLIGATION to declare income QUARTERLY and then ANNUALLY for the rest of the year.
Specifications on tax declarations – Presentation periods
Taking into consideration the above, which applies regularly, there are some specifications to consider on the time to present tax declarations for rental incomes.
Options for Declaring IncomeÂ
Annual Grouping: You can group all rental income for the year in a single self-assessment if certain conditions are met (e.g., income from the same payer and property, and the same tax rate applies).
For annual grouping, the filing and payment deadline is the first 20 calendar days of January of the year following the income year. For example, income earned in 2024 must be reported between January 1 and January 20, 2025.
Quarterly Declarations: Alternatively, you can file a separate declaration for each rental payment period.
For Quarterly Declarations, the filing and payment deadline is the first 20 calendar days of the following month of the quarter. The 20th day of April, July, October, and January for income earned during the preceding quarter.
Important note: If paying by direct debit (which is the most usual case) , the deadlines are earlier the 15th day  of the following month of the quarter.
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2.- Taxes for Non Residents: How it works?
a) Tax Base
It is composed by the total incomes received during the fiscal period from rental activity.
b) Tax Base ReductionsÂ
Having clarified the above, we will now consider how to pay the income received from any type of rent on Non Resident Tax
To the net amounts received from the rent, in case you are a resident of one of the EU countries + Iceland + Norway , in the tax you can reduce :
- Any type of expenses directly related to the rental activity.
- The interest (not the capital) of the mortgage (or any other type of credit used to buy the property) paid for the acquisition of the property.
- The IBI, garbage collection, home insurance, community expenses, etc.
- Interior reforms, maintenance, furniture, equipment, water, electricity, internet, etc.
- Marketing, advertising, lawyers, etc.
- Depreciation of real estate, furniture and appliances
The importance to apply Depreciation and activity expenses
For an effective tax program, increasing profit and reducing taxes, it is essential to register any cost and depreciation element which is acceptable by law as reduction.
Spanish system allows as tax reductions, not only the costs associated to the activity but the depreciation of the house and, also the furniture and other equipment of the property as trees, machinery, etc. Â
Just pay attention to the list of the elements which can be used to be used as depreciation at the tax declaration:
Table of depreciation rights to deduct from rental incomesÂ
Group | Movable elements | Maximum linear coefficient (%) | Maximum period (years) |
1 | Buildings, reforms, building works and other constructions | 3 | 68 |
2 | Installations, furniture, appliances and other property, plant and equipment | 10 | 20 |
3 | Machinery | 12 | 18 |
4 | Transport Elements | 16 | 14 |
5 | Information processing equipment and software and systems | 26 | 10 |
6 | Tools & Supplies | 30 | 8 |
7 | Cattle, pigs, sheep and goats | 16 | 14 |
8 | Equine livestock and non-citrus fruit trees | 8 | 25 |
9 | Citrus fruit trees and vineyards | 4 | 50 |
10 | Olive grove | 2 | 100 |
There are some kind of regulations to use these elements as:
- Maintenance costs must be directly related to the rental activity
- Maintenance and costs may be deducted only in prorate with the effective time of the activity.
- The sum of the deduction costs and the depreciation cannot be higher than incomes.
- Maintenance costs not deducted in the tax year (because it overpasses the amount of incomes) can be deducted in the 4 following years.
Differences between repairing, manteinance and depreciation cost
Improvements are not accepted to be considered as “reduction costs”, they can be only considered as a “depreciation” element.
Let’s see how is the difference between Repair/Maintenance and Improvements:Â
- Repair and maintenance expenses: These are costs incurred to keep the property in good condition or restore it to its original state. These expenses are 100% deductible in the year they are incurred, provided they do not exceed the rental income generated. If the expenses exceed the income, the remaining amount can be carried forward and deducted over the next four years.
- Example: Replacing an old elevator with a new one (repair of an existing feature).
- Improvement expenses: These are costs that increase the property’s value or add something it did not previously have. These expenses cannot be fully deducted immediately; instead, they must be amortized (spread out) over several years, typically 10.
- Example: Installing an elevator where none previously existed.
Why This Distinction Matters?
This classification impacts how taxes are reported:
- Repair and maintenance expenses: These provide an immediate deduction, which benefits landlords if the property is rented out and generates sufficient income.
- Improvements: These are treated as investments and increase the property’s “acquisition value.” This is important if the property is sold because a higher acquisition value reduces the taxable gain (and the taxes owed) upon sale.
Controversial Examples
Recent interpretations have sparked debates:
- Replacing old windows with modern ones (e.g., Climalit energy-efficient windows): While this clearly involves an improvement (greater energy efficiency and durability), the Tax Administration (TEAC) considers it a repair and maintenance expense.
- Comprehensive kitchen or bathroom renovation: Demolishing an old kitchen and building a new one is classified as a repair and maintenance expense rather than an improvement because a kitchen already existed.
However, there are exceptions to this rule:
- Replacing appliances: Switching an old appliance for a new one is not considered a repair and maintenance expense. Instead, it is classified as an improvement, amortizable at 10% annually.
Challenges Depending on the Situation
- When rental income is low: If rental income is insufficient to offset repair and maintenance expenses, part of the deduction is lost.
- Properties not rented out: If a property is renovated for sale (and not for rental purposes), being unable to classify the expenses as improvements means they cannot be added to the acquisition value. This results in a smaller tax benefit upon sale, as a higher taxable gain would be declared.
Potential Future Implications
- Given the confusion surrounding the treatment of these expenses, it is likely that the Supreme Court will need to intervene in the coming years to establish a unified criterion.
- The current approach may be seen as unfair, as it can lead to higher taxes for taxpayers by failing to recognize certain expenses as improvements.
In summary, understanding this distinction is essential for property owners, as it impacts how they can deduct expenses and reduce their tax burden, both for rental properties and property sales.
 IMPORTANT NOTE: In case you reside in a country outside the EU (USA, UK, Canada, Mexico, Russia, etc.), you will not be able to deduct the above expenses from the tax base.
Differences of tax treatment on Tax reductions and depreciation individuals vs companiesÂ
There is an important difference of tax reduction treatment depending on the nature of the landlord/tax payer:
– INDIVIDUALS. PRORATE: The majority of the property expenses, depreciation, etc, Â must be prorated between the time in which the property has been in rental activity. Only expenses directly related with the activity may be deducted in full.
– COMPANIES. PRORATE: Companies may deduct the full amount of the expenses, depreciation, etc, with no prorate. Â
Example: The property has been rented 90 days in the fiscal year, and the total amount of the expenses and deductions are 1.000 EUR.
              – Individuals: They have to prorate that amount during the rental time – 1.000/365 x 90 = 246,6 EUR
              – Companies: They can apply the whole amount as tax reduction.
– OTHER REDUCTIONS ON THE TAX BASE
– Tax Residents:
              – Permanent Resident: 60 %
              – Permanent Resident in Stressed Zones (areas defined with high demand of rental and low rental offer): Up to 90 %
– Non Tax Residents: No reductions in application
c) Tax Rate
I.- TAX RATE FOR NON RESIDENTS– The income obtained by leasing properties of NON-TAX RESIDENTS :
- 19% for citizens of the EU + Iceland + Norway : From the tax base, these nationals can deduct the following concepts: -light, water, electricity. Municipal Tax (IBI), community of owners, expenses for reforms, maintenance and repair of the property, mortgage interest and amortization.
- 24% for non-EU citizens (US, UK, Canada, Mexico, etc.): From the tax base, these nationals CANNOT DEDUCT ANY of the above expenses, so the tax base is fully taxed at 24%.
Thus, the most important differences in the NON-RESIDENT INCOME TAX IN SPAIN are the following:
- EU+Norway+Iceland residents :
- The tax base can be reduced from the expenses listed above
- Tax rate: 19%
- Residents outside the EU
- The tax base CANNOT be reduced for any reason. Thus, the amount of income received for rent will be fully taxed.
- Tax rate 24%
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 II.- TAX RATE FOR SPANISH RESIDENTS | |
Income | Tax rate |
Up to €6,000 | 19% |
€6,000 – €50,000 | twenty-one% |
€50,000 – €200,000 | 23% |
+ €200,000 | 26% |
d) VAT on Rentals?
There is a lot of confusion in the market on this question. Purely, rental income is not subject to VAT.
So if you use your property for residential or tourist purposes , YOU DO NOT HAVE TO PRODUCE AN INVOICE, and the transaction IS NOT SUBJECT TO VAT TAX .
But, this is only in case the income you receive is ONLY FOR RENT. But, when you offer other similar services to the hotel, such as:
- Restaurant, food, breakfast.
- Cleaning inside the apartment
- Washing of towels, sheets, etc.
In these cases, you have to PRODUCE INVOICEÂ and charge VAT at your service
The requirements will be:
- Produce an invoice for each of your guests.
- VAT charge (10%)
- Declare VAT quarterly
- Declare VAT annually
- Register as a business professional with the tax office
- Declare the tax for the income obtained quarterly
- Declare for income tax annually
CALCULATE YOUR TAX RETURN ON PROPERTY RENTALS
Just click below and get access to our Spanish Property Rent Calculator. Fill the form and include the information requested and you will have a very approximate calculator of your Property Rentals.