ES Rental Income

Rental Income (Rendimientos del Capital Inmobiliario)

| Income Type | Treatment | |---|---| | Monthly rent received | Full amount assessable (rendimiento íntegro) | | Tenant payment of owner expenses (e.g., IBI) | Assessable income if landlord's obligation | | Security deposit retained (for damages) | Assessable when retained | | Key money / premium paid by tenant | Assessable | | Sub-leasing income | Capital mobiliario (different category) unless property owned |

Deductible Expenses (Gastos Deducibles) -- Art. 23 LIRPF

| Expense | Deductible? | Notes | |---|---|---| | Mortgage interest (intereses del préstamo) | Yes | Limited to rental income (cannot create a loss from interest alone) | | IBI (Impuesto sobre Bienes Inmuebles) | Yes | Annual property tax paid to municipality | | Comunidad de propietarios (community fees) | Yes | Monthly/quarterly community charges | | Insurance (seguro del hogar, RC) | Yes | Building insurance, liability | | Repairs and maintenance (reparación y conservación) | Yes | Restoring to habitable condition; not improvements | | Legal fees (abogado, procurador) | Yes | Related to tenancy | | Property management (administración) | Yes | Agency fees | | Utilities (paid by landlord) | Yes | If landlord bears cost | | Amortización (depreciation) | Yes | 3% of construction cost (see below) | | Service charges (portería, jardinería) | Yes | If landlord's obligation | | Bad debts (saldos de dudoso cobro) | Yes | After 6 months unpaid + legal action initiated | | Garbage tax (tasa de basuras) | Yes | Municipal waste charge |Art. 23 LIRPF

Non-Deductible / Capital Expenses

| Expense | Treatment | |---|---| | Improvements (mejoras) | NOT deductible -- add to acquisition cost (increase cost base) | | Enlargement / expansion | NOT deductible -- capital | | Furniture purchase | Depreciated at 10% per year (not immediately deductible) | | Principal repayment of mortgage | NOT deductible (only interest) |

Depreciation rate basis

3% per annum on the greater of: 1. Acquisition cost of construction (excluding land value), or 2. Valor catastral of construction component (from IBI receipt)

Land/construction split

The recibo del IBI shows valor catastral del suelo (land) and valor catastral de la construcción (building) separately. Apply 3% to construction portion only.

The 60% Reduction (Reducción por arrendamiento de vivienda)

| Condition | Reduction | |---|---| | Property rented as tenant's vivienda habitual (primary residence) | 60% of net positive rental income | | Tourist / short-term rental | No reduction | | Commercial / office rental | No reduction | | Reduction base | Applied to positive net income ONLY (not losses) |

Ley 12/2023 (Housing Law) updated reductions

90% if rent reduced by 5%+ on new contract in zona tensionada; 70% if rented to young tenant (18-35) in zona tensionada, or social housing; 60% if substantial rehabilitation performed; 50% base reduction (replaces 60% for new contracts post-2024)Ley 12/2023 (Housing Law), effective for new contracts from 2024

Interest expense limitation

Interest on mortgage used to purchase/renovate the rental property is deductible, BUT: Interest + repair expenses CANNOT exceed rental income (they cannot generate a fiscal loss from these specific items). Excess interest/repair costs carry forward to subsequent years (5-year limit under Art. 23.1.a LIRPF)Art. 23.1.a LIRPF

Non-Resident Rental Income

| Resident Status | Rate | Base | |---|---|---| | Non-resident (non-EU/EEA) | 24% | Gross rental income (NO deductions allowed) | | Non-resident (EU/EEA including Norway, Iceland) | 19% | Net income (deductions allowed, same as IRPF) | | Filing form | Modelo 210 | Quarterly within 20 days of end of quarter |

Conditions for imputed income

For properties that are: Owned by the taxpayer; NOT the taxpayer's primary residence (vivienda habitual); NOT rented out; NOT used for business

Imputed income formula

Imputed income = valor catastral × 2% (or 1.1% if catastral value was revised in the last 10 years)

Income Patterns

| Pattern | Treatment | Notes | |---|---|---| | ALQUILER, RENTA MENSUAL, INQUILINO [name] | Rental income | Monthly rent receipt | | IDEALISTA PAYMENTS, SPOTAHOME | Rental income | Platform rental (may be tourist) | | AIRBNB PAYOUT, BOOKING.COM PAYOUT | Tourist rental income | No 60% reduction; different comunidad rules | | FIANZA RETENIDA (retained deposit) | Income when retained | Assessable in year of retention |

Expense Patterns

| Pattern | Category | Treatment | |---|---|---| | IBI, IMPUESTO BIENES INMUEBLES, AYUNTAMIENTO [city] | Property tax | Fully deductible | | COMUNIDAD DE PROPIETARIOS, ADMINISTRADOR FINCAS | Community fees | Fully deductible | | SEGURO HOGAR, MAPFRE, ZURICH, MUTUA | Insurance | Fully deductible | | HIPOTECA INTERESES, [BANK] INTERESES | Mortgage interest | Deductible (subject to limit) | | FONTANERO, ELECTRICISTA, REPARACIÓN | Repairs | Deductible (if repairs, not improvements) | | ADMINISTRACIÓN FINCA, GESTIÓN ALQUILER | Management fees | Fully deductible | | TASA BASURAS, RESIDUOS | Garbage tax | Fully deductible | | NOTARÍA, ABOGADO (tenancy) | Legal fees | Deductible |

Capital / Non-Deductible Patterns

| Pattern | Treatment | Notes | |---|---|---| | REFORMA, REHABILITACIÓN, AMPLIACIÓN | Capital (improvement) | Add to cost base | | COCINA NUEVA, BAÑO NUEVO (full replacement) | Capital | Not a repair | | HIPOTECA PRINCIPAL, AMORTIZACIÓN PRÉSTAMO | Not deductible | Principal repayment |

Gross rental income

Total rent received/receivable for the year.

Deductible expenses

Sum all allowable expenses including depreciation (3% of construction).

Net rental income formula

Gross income − deductible expenses.

60% reduction application

If vivienda habitual of tenant: Net × (1 − 60%) = reduced amount. E.g., Net income €10,000 → Reduced to €4,000 (only €4,000 taxed).

Report on Modelo 100

Include in rendimientos del capital inmobiliario section. Taxed at marginal IRPF rates (general tax base, not savings base).

Tourist Rental (Vivienda de Uso Turístico)

| Item | Detail | |---|---| | 60% reduction | NOT available for tourist rental | | Comunidad rules | Each region has its own licensing requirements (licencia turística) | | IVA/IGIC | No VAT if individual without additional hospitality services | | With services (limpieza, recepción) | May be subject to IVA at 10% (actividad económica) | | Declaration | Modelo 179 (platform reporting to AEAT) | | Obligations | Tourist licence; municipal restrictions; Modelo 100 as rendimientos |

Partially rented year

Expenses are apportioned between rented period and vacant period. Imputed income applies to the vacant period (if not available for rent).

Below-market rent

If rented below market value, AEAT may impute income at market rate. Minimum imputed income = imputed income that would apply if empty (valor catastral × 2%/1.1%).

Co-ownership

Each co-owner reports their share of income and expenses proportional to ownership percentage.

Rental at a loss

Net rental losses are part of the general tax base and can offset other general income (employment, business). The 60% reduction does NOT apply to losses (only to positive net income).

Non-resident with multiple properties

Each property requires a separate Modelo 210 filing. Imputed income also requires Modelo 210 for vacant properties.

Prohibitions

NEVER apply the 60% reduction to tourist/short-term rental; NEVER apply the 60% reduction to a rental loss (only positive net income); NEVER allow non-EU non-residents to deduct expenses (24% on gross); NEVER depreciate the land component -- only construction value; NEVER exceed the 3% depreciation rate for the property itself; NEVER deduct mortgage principal as an expense; NEVER ignore imputación de rentas for vacant non-primary properties; NEVER present tax calculations as definitive -- always label as estimated