Essential Guide to Rental Income Tax for Non-Resident Property Owners in Spain

Are you a non-resident renting out your property in Spain? Navigating the complexities of rental income tax might seem daunting, especially with varying rules for EU and non-EU residents. But understanding your tax obligations can help you reduce taxable income and avoid unexpected penalties. This comprehensive guide explains everything you need to know about non-resident rental income tax in Spain—from general obligations and deductible expenses to recent regulatory changes. We’ll walk you through practical examples and show how IberianTax makes compliance easy, positioning your property for a hassle-free tax season.

General Obligations for Non-Resident Landlords in Spain

As a non-resident landlord, the Modelo 210 is the key form for declaring rental income from Spanish properties. Here’s a breakdown to ensure compliance with Spain’s rental income tax obligations:

• Who Needs to File? Any non-resident property owner generating rental income in Spain is required to declare this income via Modelo 210. This applies whether your property is rented occasionally as a vacation rental or consistently throughout the year.
• Regional Variations – Canary Islands Requirement: If you own property in the Canary Islands and operate it as a holiday rental, you must register and file returns for IGIC (Impuesto General Indirecto Canario), the region’s local tax. This form is essential for properties used as vacation rentals, as it ensures compliance with the Canary Islands’ specific tax regulations.
• Recent Changes to Deadlines: Starting in 2024, non-resident landlords with rental income must file an annual tax return by January 20th of the following year. This update replaces the quarterly filing system for rental income earned in 2024 and onwards, simplifying the process to a single annual deadline.
• Joint Ownership Rules: For properties with multiple owners, each co-owner must file an individual Modelo 210 for their portion. For instance, if a property is co-owned on a 50/50 basis, each owner declares half of the rental income and deductions. This ensures accurate reporting and compliance.

What Expenses Can You Deduct? (EU vs. Non-EU Residents)

Deductions are allowed only for EU/EEA residents, significantly reducing their taxable income. These deductible expenses are prorated based on the percentage of days the property is rented out. Below are some examples:

• Depreciation: Spain allows a 3% deduction on the acquisition cost of the property (excluding land value). This deduction must be prorated for the rental period. For instance, with a €150,000 property acquisition cost and €50,000 allocated to land, the 3% depreciation would be based on €100,000, equating to €3,000 annually. For 90 rented days, only 25% is deductible, or approximately €739.73.
• Insurance and IBI (Property Tax): Property insurance and the annual IBI tax are deductible for the days the property is rented. So, with a €300 insurance premium and a €500 IBI tax, if the property is rented for 90 days, only 25% of these costs are deductible, amounting to €73.97 and €123.29 respectively.
• Loan Interest: Interest on a loan used to purchase the property is also deductible, based on the rented days. If annual interest is €1,200, only €295.89 would be deductible for 90 days of rental.
• Repairs and Maintenance: Unlike capital improvements, repair costs for maintaining the property (e.g., €300 for painting) are fully deductible in the rental year.

Tax Rates for Non-Residents on Rental Income

Spain’s tax rates vary by residency status:

• EU/EEA Tax Residents: Taxed at 19% on net rental income (after deductions).
• Non-EU Tax Residents: Taxed at 24% on gross rental income, with no deductions permitted.

This difference significantly impacts the tax burden, making deductions valuable for EU/EEA residents.

Examples: EU vs. Non-EU Resident Rental Income Tax

Here are two examples illustrating how deductible expenses and tax rates affect EU and non-EU residents.

Example 1: Marie from France (EU Resident)

Marie owns a property in Barcelona that she rents out for 90 days at €1,200 per month, totaling €3,600 in rental income. Marie incurs various expenses, all prorated for 90 rental days:

• Rental Income: €3,600
• Prorated Deductible Expenses:
  • Depreciation: €739.73
  • Insurance: €73.97
  • IBI: €123.29
  • Loan Interest: €295.89
  • Repairs: €300 (fully deductible)

Total Deductible Expenses: €1,532.88

Net Taxable Income: €3,600 - €1,532.88 = €2,067.12

Tax Due: €2,067.12 x 19% = €392.75

By taking advantage of deductions, Marie reduces her taxable income significantly.

Example 2: John from the UK (Non-EU Resident)

John, a UK resident, rents his property in Madrid for 90 days, earning €3,000. As a non-EU resident, John is taxed on his gross income without deductions.

Rental Income: €3,000
Tax Due: €3,000 x 24% = €720

Without the benefit of deductions, John’s tax burden is higher than Marie’s, demonstrating the impact of EU residency on tax obligations.

How IberianTax Makes the Rental Income Tax Process Easy for Non-Residents

IberianTax offers an efficient, easy-to-use platform for non-residents who need to file rental income tax in Spain. Here’s how we make compliance simple:

• Automated Calculations: IberianTax calculates prorated deductions automatically for EU residents, saving time and ensuring compliance with Spanish tax rules. This feature minimizes the risk of errors and maximizes your eligible deductions.
• Deadline Reminders and Filing Support: Our platform provides reminders before the January 20th filing deadline, ensuring you stay on schedule. Plus, our support team is available to answer questions, making tax filing as seamless as possible.

With IberianTax, you have a trusted partner guiding you through Spain’s non-resident tax requirements, so you can focus on what matters—enjoying your investment in Spain.