Renting your property – The costs

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Earn moreMany people are choosing to rent property in Spain these days, and it can be a great source of income for the owner. However, where there is income, there will be tax. It’s important not to solely rely on the income from letting your property to pay the mortgage and maintenance costs, as you may find it hard to get it covered all year round. Here is some brief information on what costs and taxes you may be subject to if you decide to let your property.

Income tax, how much to pay and when (Non-residents)

When your property is being rented out, the amount of income tax payable is usually a flat rate of around 25% of the gross income earnt from letting the property. This would be paid quarterly for the previous 3 months. When filling out your tax return, don’t forget to offset any expenses you pay on behalf of your tenant such as the water or electricity. Be aware though, the tax authorities work closely with the electric and water companies, and will know if the bills are being taken from your bank account or your tenants so you must only offset the expenses paid for by you.

If your property in Spain is not being rented out yet, and is not your primary home, you are still obliged to pay a personal tax known as non-resident imputed income tax. This is because, although you have no income from your property yet, in the eyes of the Spanish tax authorities, you still have a benefit of owning a property in Spain, so therefore have to pay the imputed tax which is payable annually. The rate of this tax is calculated by the valor catastral (rateable value) of your property. The local town hall will assume you are making 2% of the valor catastral per year and tax you 25% of that amount even if you are not renting your property out. If you are a UK resident, you would still be liable for tax in the UK, but any tax you pay in Spain will be offset against the amount.

Additional costs associated with renting your property in Spain

Other costs may include solicitor’s fees for drawing up a tenancy contract, which is very important especially for long term rentals. To find out more information on renting your property, please read our previous blogs on; preparing your property for rental, the laws on evicting tenants and other subjects.

For more information on renting your property, drawing up a contract, and tax advice, please contact where they can take care of all of this for you. Email or call (+34) 952 83 95 95.

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