Renting out real estate in Spain through online services: Resident taxes

Renting out a house, apartment or room is one of the most common ways to make money all over the world. And it doesn’t matter at all whether it is the main or additional source of income.

Spain is no exception. The Spaniards themselves, as well as residents and non-residents of the Kingdom, actively use the rental of real estate as a profit. This is not surprising as the country has always been a magnet for tourists.

But, as they say, there is always a flip side of the coin. Taxes …

Taxes and Spain are almost synonymous. Therefore, in this article, we decided to talk about taxation in case of renting an object for tourist purposes through online services (airbnb, homeaway, booking, etc.) by residents of Spain, since most of them use these platforms to find potential tenants.

Residents are required to declare rental income in full for properties located both in Spain and abroad. In the second case, the amount is taken into account after deduction of taxes paid in the country of location of the rented property, but within the limits established by Spanish law.

But there is an exception! Upon receipt of profit from all rental payments of not more than 1,000 euros per year, the tax resident is exempted from declaring income. But be careful! If you receive € 950 from Airbnb and € 2,300 from your main job, you have to declare everything because the total is over the limit.

So, a resident is obliged to submit a Declaration on IPRF (personal income tax) by filing Modelo 100.

This tax is paid annually from April to June for the previous reporting year. That is, in 2021 it is necessary to declare rental income for 2020.

IRPF is calculated on a progressive scale: from 19% (with income up to 12,450 euros per year) to 47% (from 300,000 euros or more).

Unlike long-term lease of residential premises, where a resident can take advantage of a 60% discount, in accordance with article 23.2 of the Income Tax Law, this is not possible with a short-term lease.

But there are a number of deductions that a resident can count on:
– the commission charged by the booking platform;
– cleaning of the tourist facility;
– public Utilities;
– Renovation of rented real estate, including furniture and appliances;
– washing of bed linen and towels;
– depreciation 3% of the cadastral or original value of real estate, minus part of the land, or 10% of the purchase price of furniture or premises;
– interest on a mortgage loan, etc.

When renting only one room or real estate for an incomplete year, it is necessary to proportionally distribute the area of ​​the house or days of the year that were allocated for renting, the above deductions.

In addition, each autonomy may have its own specifics and other benefits when calculating the IPRF.

The second important tax is VAT (IVA). This is a payment for the consumption of goods and services, which is deducted from individuals, and the lessor acts as a tax collector.

When renting a home on a short-term basis without providing any services, the tax resident is not required to pay tax. But in practice, this is rare, since when renting through an online platform, most often guests are offered a service that goes beyond the generally accepted ones (cleaning before and after check-in, periodic bed linen change, reception, etc.).
In this case, in addition to income tax, VAT is also charged in the amount of 10% of the cost of services. These include breakfast, change of bed linen and towels during guests’ stay, cleaning, laundry services, left-luggage office, that is, everything that relates to the living business.

If you have any questions or need advice on the delivery of real estate, please contact our specialists.