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Spanish rental income tax - offsetting costs

Published 26/04/2011

Spanish rental income tax - offsetting costs


Renting is the new buying. It’s come out of the doldrums for all kinds of different reasons. With a sluggish market and the need to move, people are choosing the renting option. Others are taking advantage of the availability of cheap properties and are renting them out to long term tenants or holiday makers. Those considering a move to Spain are perhaps dipping their toe in the water first by choosing to rent a property.

Renting your property first gives you flexibility. A benefit that has been further enhanced with the arrival of rent-to-buy.  This means that you can move into a property as a tenant and pay rent whilst you get to know the area and the neighbours. If you like it you have the option of buying at a later stage and may even have the rent you’ve paid deducted from the price.  

If you rent out your property it is important to remember that there is rental income tax in Spain. This is payable quarterly for the previous three months. So for January, February and March’s rent you will complete your tax return before April 20th. You will need to provide some details about your tenants including names, ID (passport or NIE), rental periods and dates.

The good news is, that you can offset many of your expenses against your income. The following table shows what you can and can’t offset.

Can offset Cant offset
Water & electric x
Insurance x
Rental agents x
Interest on mortgage x
Community x
Rates (IBI) x

Of course, you will only have water and electricity offset if you pay these for your tenant.

All in all, renting is a good alternative. Remember though, the Tax Authority have established links with the land registry, water and electricity companies. They are checking up on who is renting out their property and who is eligible to pay personal taxes in Spain. During those periods when your property isn’t let you are still obliged to pay the non-resident imputed income tax. This income tax is payable by non-residents on an annual basis as part of the annual tax declaration before 31st December.

Renting is a good option to consider but, as with most aspects of life in Spain, make sure you take good advice and are clear about your obligations.


Susan Partridge Helme

Susan Partridge Helme
Tax Advisor

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