For many foreign property owners, renting out a property in Spain represents an opportunity to generate income. However, before signing any contract or advertising the property, there are key decisions that should be taken carefully in order to avoid tax, legal or administrative issues that may arise even before the first rental income is received.

This article explains, in a practical manner and in accordance with current regulations, the main aspects that a non-resident property owner should consider before renting out a property in Spain, whether through long-term rentals or short-term and tourist accommodation.

1. Defining the Type of Rental from the Outset

Before renting out a property, the first essential step is to define the type of rental, as this choice will determine most of the subsequent obligations.

The main options are:

  • Long-term rental, intended as the tenant’s habitual residence.
  • Short-term or tourist rental, involving temporary stays and higher turnover.

This decision directly affects:

  • Administrative obligations.
  • Regional or local regulatory requirements.
  • Applicable tax rules.
  • Management and control costs.
  • The level of supervision by public authorities.

Choosing a rental type without analysing these implications is one of the most common mistakes made by non-resident owners.

2. Administrative Requirements and Prior Documentation

Regardless of the rental duration, it is essential to have proper documentation in place from the beginning.

This generally includes:

  • A properly drafted rental agreement, compliant with the applicable regulations.
  • Tourist registration or licence, where short-term rentals are involved, in accordance with regional legislation.
  • Compliance with information and reporting obligations applicable to property owners and, where relevant, digital platforms.

In recent years, registration and information-sharing systems have been strengthened, making it especially important that rental activities are correctly documented before they begin.

3. Essential Taxation of Rental Income for Non-Residents

Rental income obtained from property located in Spain is subject to Non-Resident Income Tax (IRNR).

As a general rule:

  • Residents of the European Union, Iceland or Norway are taxed at 19 % and may deduct certain expenses directly related to the rental, provided they are properly justified.
  • Residents outside the European Union are generally taxed at 24 % on gross income, without the possibility of deducting expenses.

When rental income is obtained, tax returns are usually filed on a quarterly basis using Form 210.

Advance tax planning allows the owner to assess the real tax impact of the rental activity and avoid future adjustments.

4. Deductible Expenses and Application Criteria

For owners resident in the European Economic Area, expenses necessary for obtaining rental income may be deductible.

These typically include:

  • Community fees.
  • Property tax (IBI).
  • Insurance.
  • Utilities.
  • Maintenance and repair costs.

The deductibility of expenses is subject to strict documentation and proportionality criteria. Incorrect application is one of the most common causes of tax enquiries by the Spanish Tax Agency.

5. Common Mistakes Before Renting the Property

Among the most frequent errors made before starting the rental activity, the following stand out:

  • Choosing a rental model without analysing its legal and tax implications.
  • Failing to comply with mandatory registrations or licences.
  • Inadequate formalisation of the rental agreement.
  • Misunderstanding the applicable tax rate based on tax residence.
  • Lack of proper documentation from the outset.

These errors often lead to tax enquiries, adjustments and penalties that could have been avoided through proper planning.

6. Conclusion: Planning Before Renting

Renting out a property in Spain as a non-resident can be a viable and profitable option, but it requires well-informed decisions from the very beginning.

Defining the rental type correctly, complying with administrative requirements, understanding the applicable tax rules and organising documentation from the outset significantly reduces risks and provides legal certainty and peace of mind for the foreign property owner.

How can our firm assist you?

Our firm regularly advises non-resident property owners on the proper planning and management of rental properties in Spain, providing comprehensive legal and tax assistance aimed at ensuring full compliance with applicable obligations.

Our services include, among others, pre-rental tax and legal advice, preparation and filing of tax returns, representation before the Spanish Tax Authorities through a power of attorney, review of previous tax situations and assistance with the regularisation of issues arising from rental activities.

If you would like an individual assessment of your situation before renting out your property in Spain, you may contact our firm through www.delgado-vila.com or visit any of our offices in Málaga, Torrox-Costa or Mijas-Costa.