When a property is not rented to third parties, the property owners have to pay an annual tax based on the deemed rental value of their homes. The ‘taxable base’ is 2% of the cadastral value of the property (1.1% if this value has been revised during the last 10 years), and the tax rate is 24%. No property costs can be deductible. However, for EU residents the tax rate will be 20% in 2015, and will be reduced to 19% from the 1st of January 2016.
If the property is rented to third parties, the rental income needs to be declared and the tax paid to the Spanish tax office. For EU citizens, the tax rate is 20% (19% in 2016) of the net rental income, whereas for non-EU citizens the tax rate is based on the gross rental income.
For EU citizens, only the costs that are directly related to the generation of the rental income are deductible (e.g. agents fees, cleaning, laundry, repairs and maintenance). In the case of all other property costs (e.g. local rates, community fees, utilities or interest on bank mortgages) they are only deductible pro rata to the number of days the property is rented.
For the number of days, within a calendar year, a property is not rented out, it remains subject to deemed rental income as explained at the beginning of this section.
The tax declaration is called Modelo 210 and the deadline for the payment is 31 December each year.
Property owner in Spain? Need help managing non-resident and rental income tax in Spain?