Taxes on renting a property in SpainЕлена Шляпникова
Owning a property in Spain is profitable and prestigious, as it is an opportunity to enjoy vacations on the shores of the Mediterranean Sea almost all year round. However, it also means that you, as the owner, have certain tax obligations in Spain. Of course, these obligations vary depending on your state and the type of residence in Spain, if you have one, since there are different types of residence permits in the country. In this article, we offer you a brief description of the beared taxes when renting a property in Spain.
Taxes if you are non-resident of Spain: the income tax rate of rent payments by persons who do not have permanent residence or permanent representation in Spain, is from 2012, the 24.75 % of the total amount received, although (as well as for residents in Spain) certain expenses can be deducted if the owner is a resident of the European Union. This tax is paid to the Treasury of Spain based on each rent payment as they are received. Alternatively, the taxpayer may choose to pay this tax on the amount of the rent payments received each quarter.
Taxes if you are resident in Spain: the income received for renting a property by persons who are resident in Spain will be added to other total income. In this case, the tax base will be subject to the income tax rate of a physical person in Spain. This tax is called Personal Income Tax (IRPF) and this rate can vary from 24.32% to 56%, depending on the autonomous region of Spain. All the profits of an individual will be declared each year by means of the presentation of a declaration of the incomes for the payment of the income tax of resident of Spain. In contrast to non-residents (with the exception of EU residents), of the total income of the rent, in this case, the following expenses can be deducted:
- The interest paid on loans for the purchase of real estate in Spain, as well as the costs of the reform of the property.
- The sum of local taxes.
- Payments to third parties for professional services (f.e. administrator, chef, etc.);
- Administrative costs associated with the registration of rent contract.
- Insurance policies of real estate and their increases, as well as the liability that may arise in connection with them.
- Utilities and other costs of supplies.
- Amortization of the value of the property.
In addition, residents in Spain can enjoy the tax benefits of rental income from real estate that is used for living and not as a commercial premise.
It is also necessary to consider that the tax obligations will be different if the owner who receives the rent is a company legally registered in Spain.
Our company deals with the calculation of the taxes of residents and non-residents in Spain for more than 15 years. The specific information about the taxes that you have to pay in your particular case and what benefits you can take advantage of, as well as professional advice, will be provided by our lawyer in Barcelona.