Lawyer Raymundo Larraín explains how to profit from knocking off 70%, or more, from your tax bill on renting out in Spain (applies to both holiday lettings and long-term rentals).
Marbella-based Larraín Nesbitt Lawyers has over 16 year’s taxation & conveyancing experience at your service. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain. You can review here our client’s testimonials.
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By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
8th of March 2019
Becoming a landlord in Spain has never been easier and more profitable than today:
- Rental yields climbed steadily by two digits (14.5%) YOY for a third consecutive year. Source: Idealista.
- Spain has broken its tourist record for its sixth year in a row! It has consolidated its hospitality status as the world’s second tourist hotspot, attracting almost 83 million visitors in 2018. Sources: BBC, El País and SPI.
Adding to all this good news, following new regulation, all non-resident EU/EEA property owners, who lease property in Spain, are entitled to deduct from their tax bill all property-related expenses. Iceland, Liechtenstein and Norway tax residents may also benefit from these generous tax deductions. Switzerland is excluded.
That is quite a lot of money you can offset every tax quarter, greatly mitigating your landlord tax bill on renting out. This new tax change translates into average tax savings of 70%, or more, for landlords. If you are not EU-resident, you cannot benefit from it.
This hinges on you receiving from your suppliers a VAT invoice. It must meet the following requirements.
Not submitting quarterly tax returns in Spain on your rental income is no longer an option, following new draconian tax laws that have turned all holiday platforms, and other intermediaries, into tax office whistleblowers retroactively as from the 1st of January 2018. All your rental income is now being reported to the Spanish taxman, unbeknownst to you. Fines for non-compliance are very steep. More on this here: Property portals and rental platforms to pass on landlord details to the Spanish Tax Authorities. Are you prepared? AirBnb, for example, explains its new tax ‘sharing’ data policy with the Spanish Tax Office on its website.
Landlord tax relief
You may claim as tax relief all the following property-related expenses:
- Interests arising from a mortgage loan to buy the property (not a personal loan).
- Local taxes and administrative charges and surcharges that impact on the rental income or else on the property itself (i.e. IBI tax, SUMA tax, refuse charge).
- Expenses arising from formalising rental contracts such as lets or sublets (i.e. Notary and/or Land Registry fees); legal defence (i.e. hiring a lawyer for tenant eviction purposes).
- Maintenance costs may be offset; refurbishment expenses (improvements) are excluded (however, you may offset them on selling on the property).
- Community of owners’ fees: these receipts have no VAT, by law.
- Home insurance premiums: fire, theft, civil liability etc.
- Property repairs: plumbing, roof retiling, painting, pool pump etc.
- Utility invoices: electricity, water, gas, internet, and landline.
- Cleaning: cash payments are not tax-deductible, you need a VAT invoice.
- Concierge, gardening, alarm & security services (i.e. gated communities).
- Lawyer’s fees: are 100% tax-deductible! To calculate and submit you quarterly tax returns.
- Property management fees: to manage your rentals.
- Advertising expenses: online/offline.
- Marketing expenses.
- Home depreciation and amortization. The calculation is 3% on the highest value of the following two: sales price or cadastral value; the value of the land is excluded.
Legal requirements to benefit from tax relief
- You are tax resident in the Union or EEA (your nationality is irrelevant).
- The expenses you claim are in direct relation towards the upkeep of the property i.e. claiming travelling expenses would be excluded.
- You have VAT invoices to back up your tax relief claim.
– Is your tax advisor reducing your tax bills by 70%, no?
– Does he moan it is much too complicated, or make up excuses?
– Do you suspect he’s holding back on you?
Don’t put up with it! If you dislike time-wasters and overpaying taxes, come and speak to us. We will reduce your tax bill by 70%, on average. Call or email us to book an appointment. We will review your personal tax situation and advise accordingly. The procedure is fast and easy. We make life simple.
We offer the most competitive fees in the market.
Holiday Rental Accounting Service (HRAS) from only €125/tax quarter/property
We are specialized in taxation
Larraín Nesbitt Lawyers, small on fees, big on service.
Larraín Nesbitt Lawyers is a law firm specialized in taxation, conveyancing, inheritance and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at firstname.lastname@example.org, by telephone on (+34) 952 19 22 88 or by completing our contact form to book an appointment.
Article originally published at Larraín Nesbitt Lawyers: Save 70% on your landlord tax bill.
“Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth.” – Arthur Conan Doyle
Sir Arthur Ignatius Conan Doyle (1859 – 1930). Edinburgh-born, he was originally trained as a physician but would achieve world-renown as a writer of detective stories. He is universally known as the father of fictional character Sherlock Holmes. His fiction works are considered milestones in the crime fiction subgenre.
Tax & legal services available from Larraín Nesbitt Lawyers:
- Non-Resident Income Tax (Fiscal Representation)
- Holiday Rental Accounting Service (HRAS)
- Registration of Holiday Homes (Andalusia)
Holiday lettings-related articles
- Holiday Rental Laws in Spain – 8th of March 2015
- Non-Resident Taxes in Spain – 8th December 2015
- Holiday Rental Laws in Andalusia (Decree 28/2016) – 8th of February 2016
- Renting in Spain – Landlord´s Taxation – 8th of January 2017
- Holiday Home Taxation in Spain – 8th of July 2017
- Non-Resident Income Tax – 8th December 2017
- Holiday Rental Taxation in Spain – 8th July 2018
- Holiday lettings: with or without VAT? – 21st June 2018
- You are taxed at source on renting out in Spain – 30th November 2018
- Property portals and rental platforms to pass on landlord details to the Spanish tax Authorities. Are you prepared? – 8th January 2019
- Holiday lettings: VAT invoice dissected – 11th February 2019
- Save 70% on your landlord tax bill – 8th March 2019
Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.
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