Taxes and Expenses when Renting your Vacation Apartment

Renting out your vacation rental can be a great way to generate additional income, but it’s important to understand the associated taxes and expenses to avoid unpleasant surprises.

In this article, we will provide you with a complete guide to the taxes and expenses you can expect when renting your vacation rental, helping you plan and manage your property effectively.

VAT

The VAT varies depending on how you decide to rent your holiday home, there are three options:

Rent with a management company

It consists of transferring the apartment to a company that is actually in charge of managing the rental of the house on vacation and during the rest of the year to get the most out of it.

When transferring the home to a management company, 21% VAT must be included in the operation.

Rent the tourist apartment directly

If you choose to rent the apartment directly on your own, VAT will not have to be included unless additional hospitality services are provided. These include, for example, food. In the end what is done is to apply the same criteria as in the VAT of a hotel.

Rent through Airbnb and other platforms

This is the most widespread alternative today. It is precisely new technologies that are behind the boom in rental apartments. The reason is that thanks to them it is very easy to connect the owner and the tourist, both on vacation and during the rest of the year.

Does VAT have to be included on Airbnb? The platforms themselves are the first to clearly report the process. But to make it clearer, as the owner you will have to add 21% VAT to the intermediary’s invoice. If you offer services specific to the hotel industry, 10% VAT will be added for them, but not for the accommodation.

If you rent on Airbnb, Wimdu, HomeAway, Niumba, Hometogo, Rentalia or similar, keep in mind that Hacienda has its focus on this type of rentals as it previously did on second-hand platforms.

So much so that if you rent through these types of platforms, these platforms are obliged to inform the Treasury of the homes they rent for tourist purposes. This procedure is done through Form 179 of the Annual Informative Declaration of the transfer of use of homes for tourist purposes. This is how the Treasury controls the apartments that are rented and whether or not they pay taxes.

Income Tax

The income obtained from renting your holiday apartment is subject to tax and must be declared in your annual income tax return. Depending on your tax situation and the applicable tax regime, you may be required to pay a percentage of your rental income as income tax.

It varies depending on whether you have a tourist rental with accommodation services or a tourist rental without services.

The percentage of personal income tax also varies depending on whether you are a Spanish, community or non-EU resident:

• Non-residents outside the EU: 24%
• Spanish or community resident: 19%

IBI

As a homeowner, you will likely have to pay property tax to your municipality. This tax is based on the property’s cadastral value and is usually paid annually.

TOURIST RATES

Some cities and regions impose tourist taxes on guests staying in tourist establishments, such as holiday apartments. These fees are usually a percentage of the price of the stay per night and must be paid by the owner and reported to the relevant authorities.

Expenses Associated with Vacation Rentals

• Maintenance and Cleaning: It is important to keep your vacation apartment in optimal conditions to receive guests. This may involve regular expenses on cleaning, appliance maintenance, minor repairs, and replenishing supplies.
• Advertising and Marketing: To attract more guests and increase the occupancy of your vacation rental, you may need to invest in advertising and marketing. This may include creating and maintaining a website, promoting on vacation rental platforms, and hiring digital marketing services.
• Management Fees: If you decide to hire the services of a vacation rental management agency, you may have to pay a fee for their services. This may include marketing the property, managing reservations, checking in and out of guests, and resolving issues during the stay.
• Insurance: It is advisable to have specific insurance for vacation rental properties. This type of insurance can cover property damage, civil liability, loss of income due to cancellations of reservations and other risks associated with renting your vacation rental.