Tax Benefits of Renting Your Property Temporarily
Short-term rentals have become an attractive option for landlords seeking profitability without committing to long-term contracts. In addition to offering flexibility and increased income, this rental model can provide tax benefits that many landlords are unaware of.
What are the tax benefits of short-term rentals?
By opting for short-term rentals, owners can access certain tax incentives and deductions that can make their investment even more profitable. Some of the most important benefits include:
1. Reduction of personal income tax on rental housing
In Spain, property owners who rent out a property as their primary residence can apply a 60% reduction to the net income earned. However, if the property is rented seasonally, this benefit may not apply, but other property-related expenses may still be deductible.
2. Deduction of expenses associated with housing
Homeowners can deduct multiple housing-related expenses, such as:
- Mortgage interest linked to the rental property.
- Maintenance and repair costs, provided they are not structural improvement works.
- Supplies such as water, electricity, gas and internet, if they are included in the rental price.
- Real estate management fees, if you hire a company like Youhomey for rental management.
3. VAT exemption in certain cases
In most cases, rental housing is exempt from VAT. However, if additional services such as cleaning or reception are included, the owner may be required to pay 10% VAT, as is the case with tourist rentals.
4. Reduction in the Real Estate Tax (IBI)
Some autonomous communities and municipalities offer property tax discounts for owners who rent their homes for medium- or long-term rentals. It's a good idea to check with your local council to learn about any applicable reductions.
5. Compensation for depreciation of the property
Owners can deduct the depreciation of their property on their income tax returns. Generally, they are allowed to apply a percentage of the property's acquisition value or cadastral value, which reduces the taxable income and, consequently, the tax payable.
Legal requirements and considerations
To benefit from these tax advantages, it is essential:
- Correctly declare rental income before the Tax Agency.
- Know the regional and local regulations, since each community can establish specific requirements for this type of rental.
- Have a temporary rental agreement well-written, specifying the duration of the lease and its conditions.
Conclusion
Short-term rentals are not only an excellent way to earn additional income, but they also offer significant tax benefits. However, to maximize these advantages, proper tax management and compliance with current regulations are essential.
If you are looking for comprehensive management of your property that optimizes profitability and helps you with tax administration, Youhomey can be your best ally.
