The tax you pay on rental income is 25%. On top of this you pay a wealth tax and an income tax whether you rent it or not. If you have a spanish mortgage you can set it off against the amount of tax you pay for these taxes. There is a page about all these taxes if you look up the index on the general forum. If you have a mortgage in england or where ever you reside you cannot set this off against these taxes. With regards to rental income – I did a good bit of research last year before buying my property. Look up costa blanca rentals on your search engine, ask them some questions. In my own opinion, I was going to rent out but after a long hard look at it all between ware and tear and how many weeks of the year you would rent out and paying your 25% on the rental – I wasn’t convinced. But that’s not to say if you rented it directly yourself to people you know, did your own advertising – well you wouldn’t have to pay this 25%. There are a lot of resales out there for good value.
I hope this is of some value to you.