Declaring income from renting in Spain

Popular belief has it that the non-residents’ tax is paid on an assumed income from renting. That is not correct. Although the said tax is a so-called income tax it is a nominal tax and does not free a non-resident from the obligation to declare and pay taxes on any real income earned from renting their property.

 Due to the Spanish government’s plan to regulate the holiday rental industry the tax authorities in Spain are now seriously looking into any income not being declared. Please be aware that the tax authorities might check your water and electricity consumption for the past years. Regular consumption of water and electricity in a property that is owned by a non-resident is the biggest tell-tale sign for them to start an investigation.

 Non-residents that are letting their property are obliged to declare income from letting their Spanish home for every quarter of the running year in a separate declaration. If you have declared such income in the UK the tax you have paid will be deducted from what you owe in Spain, based on the double-taxation agreement. Residents declare any rental income in their annual income tax declaration during the months of May and June of the following year.

 Both residents and non residents may deduct a number of expenses. The obvious being water and electricity bills during the time of occupancy by a tenant. Furthermore, expenses such as rates, rubbish collection and sewage, insurance and community fees can be deducted. In addition you may also deduct an annual depreciation of 3 % of the purchasing price, including taxes and possible expenses for extensions or improvements of the house (always provided you have official invoices). And an annual depreciation of 10% of the expenses for white goods and furniture and fittings.

 I hope this has been helpful.

 The above is based on data issued by the tax authorities at the time of publication and meant for informative purposes only.

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