One way to make money in Spain is to rent out property, specifically as a holiday home or even as a longer-term let.
Property prices in Spain have picked up since 2018 and we are seeing a five per cent capital appreciation across the board.
In addition to this, rental yields have been growing year-on-year by two digits for three consecutive years.
As Spain now ranks as the world’s second tourist destination, only behind America, the prospect of investing in the country looks brighter than ever.
The combination of both capital appreciation and soaring rental yields translates into properties offering landlords a combined yield of over 10 per cent per annum.
Experts predict that Spanish property is poised for combined two-digit gains over the next years easily beating alternative investments and paltry fixed returns in a context of historic ultra-low interest rates.
There are also tax advantages open to non-resident landlords.
Tax deductions available for non-residents apply to both short-term rentals (holiday homes) and long-term rentals
Non-resident landlords can take advantage of huge tax breaks on their landlord tax bill.
The following requirements must be met:
- The landlord is tax resident in the European Union or EEA (nationality is irrelevant).
- The expenses you claim are in direct relation towards the upkeep of the property i.e. claiming travelling expenses would be excluded.
- You have IVA invoices to back up your tax relief claim.
Non-residents in Spain (albeit EU-resident) may deduct the following expenses from their quarterly tax returns:
- Interests arising from a mortgage loan to buy the property.
- Local taxes and administrative charges and surcharges.
- Expenses arising from formalising lease agreements.
- Maintenance costs may be offset; refurbishment expenses and home improvements are excluded but may be claimed on selling the property.
- Community of owners’ fees.
- Property repairs, utility bills, cleaning, and general services like gardening. Property repairs: plumbing, roof retiling, painting, pool pump etc.
7.Lawyer’s fees are 100 per cent tax-deductible when calculating and submitting your quarterly tax returns.
There are other deductibles as well, but as you can tell, there is going money to be made from letting out a property in Spain from an investment perspective!