Renting out property in Spain
If you are looking to make more money on your Spanish property investment, you may consider renting out the property. Investing in Spanish property and renting it out is a great way to make money. Renting out property that you already own, but use sparingly is also a great way to make a return on your investment.
Before renting the property to a tenant, you need to ensure the experience doesn’t turn into a problem. There are certain obligations you must meet to rent out your Spanish property. You should seek out financial advice to ensure you keep on the right side of the Spain’s tax laws.
Guaranteed rental income from Physis Realty
The multi-award winning Physis Realty has it’s own property portfolio of rental properties and are always seeking property to add to this exceptional venture. Not every property is suitable for our guaranteed rental platform, though we do also have one of the strongest long term rental books in Spain, with no shortage of fully vetted, background checked tenants. Physis Realty only accepts and manages long term rental properties starting at €3.500 p.m.
Spain landlord tax obligations
Landlords in Spain must declare their rental income which allows them to be taxed appropriately. The income must be declared quarterly in Spain if you are a non-resident of the country. The declaration is completed by using form 210 and landlords must pay the tax on:
- Quarter 1 – before 20th April
- Quarter 2 – before 20th July
- Quarter 3 – before 20th October
- Quarter 4 – before 20th January
The income declaration must be completed before the 15th of each month. The tax is then deducted from the landlord’s bank account on 20th of the month. A financial advisor can help you through the process and many landlords living abroad seek an advisor’s help to complete the payments.
If you are a resident of the EU, Norway, or Iceland, expenses can be deducted from your account. These expenses include:
- Council tax
- Community charges
- Cost of utilities such as electricity and water
- Any house insurance you pay
- Mortgage interest
- Cleaning and laundry costs
- Legal and accounting costs
If you plan to rent out your property in Spain, you should consider developing a system to keep track of expenses. A system will enable you to keep track of your financial accounts to present to the Spanish authorities.
Each quarterly declaration needs to include:
- Tenants’ names
- Dates of occupancy
- How much you have received in rent paid
Residents of Spain renting out a property should declare this information as part of their annual income tax. Residents of Spain make their income tax declaration before the end of June.
Renting out property in Spain rules
Spanish property owners must comply with strict rules when renting out their properties to short-term tenants. The rules are set by local and/or autonomous governments. Rules can be very difficult to understand for expats, but in some cases are used to protect the property and properties owned by other landlords.
An example of the strict rules Spain’s local governments enforce include giving out licenses for short-term rentals. Barcelona and Ibiza, two of Spain’s most popular travel destinations, have rules in place that allow for short-term rentals only. Gaining a license to rent can be difficult and the properties that possess them are often expensive to let.
What if you break the property rules in Spain?
There are individuals that rent out property in Spain and overlook the rules. These individuals let out their properties without permission and receive income from the rent in their country of residence. Spanish tax inspectors use the same online property portals to hunt down individuals breaking the rules that others use to search for new homes. If you market a property on an online portal, you give the tax authorities the chance to track you down.
How to register Spanish property tenants
One of the things you must do when renting out property in Spain is keeping the Policia Nacional and/or Guardia Civil informed. A third-party company that lets out the property for you should inform the authorities automatically. However, if you rent out the property yourself, then it is your responsibility to contact the authorities.
The authorities must know the identity of each occupant in the property under 16-years-old. The information needed includes:
- First names and surnames
- Identity document reference such as a passport number
- Date of birth
- Sex and nationality
- The dates of property occupation
Landlords must also give their details to authorities. Details include:
- First name and surname
- Signed form
Although the rules to rent out a property in Spain may be difficult on the surface, it really isn’t in practice. Letting out your property in Spain is a great way to make a return on your investment.
Spanish rental contract
The length of tenancy is up to you and the renter. In any case, you will want to have a Spanish rental contract signed. The Spanish rental contract should include:
- The landlord and tenants’ identities
- The address and registration details of the property
- The duration of the tenants’ rental period
- The rental fee
The duration of the contract should be agreed upon by both parties. The length of the contract can make for a few differences to the rental agreement.
- A contract that is less than five years in length – According to Spanish rental law, after one year has passed, renewal of the contract is mandatory of up to a maximum of five years. The rental agreement may only be cancelled if the tenant gives 30 days’ notice of cancellation before the conclusion of each year. Additionally, the contract can be cancelled if the landlord needs the property for his own use as a home.
- A contract that is five years or more in length – If neither the renter nor landlord give 30 days’ notice of contract cancellation, the contract may be extended an additional year up to a maximum of three years.
- Seasonal rental contracts – Spanish rental law doesn’t allow seasonal rental contracts. However, they are used for durations of one year or less as long as the tenant does not use the property as a permanent home. The property must be used for holidays or during an academic term by students. Seasonal rental contracts can be agreed upon by the landlord and tenant.
If you want to generate some additional income or invest in property in Spain, renting out your property is a great way to make money. Although there are some rules to follow, you can benefit from renting out property in Spain.