PLEASE NOTE THE NEW LAW HOLIDAY RENTALS LAW WILL COME INTO FORCE ON 12TH MAY – PLEASE READ OUR ARTICLE AT
https://decottalaw.com/holiday-rentals-new-law/ FOR THE NEW RULES
Here is some useful information for those renting out their properties here in Spain (as non-residents, or as tax residents, or as hosts of a B&B)
Rental of Spanish property by non-residents
If you do it is important to make a tax declaration either after each rental or quarterly. This is because the tax on rentals of property is payable in the country where the property is situated. It is not sufficient to declare the tax in the country where you are paying your income and other taxes. Often non residents will say they make a declaration to the Inland Revenue in the UK but this is not correct as the physical property is in Spain.
You still have to declare the rental in your home country, in the UK the Inland Revenue do require a declaration but there is a Double Taxation relief treaty. This means you will not be taxed twice and you pay the lesser amount, either the tax paid in Spain or the UK tax liability. You can get further advice from an accountant in your home country.
The declaration is made using a Modelo 210. You might only rent the property from time to time but you still need to ensure that your annual 210 declaration as a property owner is made. If the property is registered in joint names each owner has to make the declaration. Some of your costs such as IBI and Community fees are deductible.
Spanish tax residents renting out property that is not their home.
Spanish tax residents must declare rental on their annual return. This is made in the following year in May-June so rental obtained in August 2014 would have to be declared in May-June 2015. This also applies if you rent out property which is outside of Spain.
The allowances or deductions are generous as they include utilities, rates, interest on mortgages and other deductions. Provided it is rented as a dwelling rather than a business there is a further 60% deduction.
Spanish tax residents renting out the property or part of the property they live in.
This applies to people who own larger properties with an annexe or smaller cottages forming part of the same complex. The same rules apply as above but you do need to establish if you are actually providing more than just accommodation. If you start to provide breakfast for example you may be considered to be running a business and need to register for social security and follow any employment regulations and tax rules.