Deductible expenses in tourist rentals are key to optimizing taxation and avoiding paying more taxes than necessary.
How tourist rental income is taxed?
When you rent out a property for holiday use (by the day or week), the income earned must be declared in your Spanish Personal Income Tax (IRPF) or Non-Resident Income Tax (IRNR) return, depending on whether or not you are tax resident in Spain.
Such income is classified as real estate income, unless the rental qualifies as a business activity (with full-time staff or hotel-like services).
In this article, we explain in simple terms which expenses you can deduct in your annual tax return if you rent out a holiday property as a private owner. We also include examples to make it easier to understand.
Deductible Expenses:
Repairs and Maintenance.
These are all expenses needed to keep the property in good condition and ready for letting.
They are 100% deductible, as long as the property has been rented, even if only for part of the year, or if it was genuinely offered for rent (for example, if renovation works were carried out while looking for tenants or the property was advertised on platforms).
Common examples:
• Painting the walls before the summer season.
• Replacing a broken appliance.
• Fixing damp, leaks, or electrical installations.
• Repairing air conditioning or the boiler.
• Changing locks, windows, or damaged blinds.
• Hiring a plumber or builder for specific repairs.
These expenses do not need to be prorated: if the repair was done, the full cost can be deducted in the same year.
Taxes and General Expenses.
These include the most common and recurring costs associated with owning the property.
Most of these expenses must be prorated according to the number of days the property was actually rented during the year.
What does this mean?
If your property was rented for 120 days (one third of the year), you may only deduct one third of these expenses.
Examples of prorated expenses:
• IBI (Property tax) – annual municipal tax.
• Rubbish collection fee.
• Community of owners’ fees.
• Home insurance (multi-risk, liability, etc.).
• Utilities (electricity, water, gas – if paid by the owner).
• Lift, garden, or communal pool maintenance.
• Estate agency fees for rental management.
Practical example:
If you paid €900 in community fees over the year and rented for 6 months, you may deduct €450.
Tip: Always keep receipts and invoices in your name. The Spanish Tax Authority (AEAT) may request them during a review.
Important:
Not all expenses are treated the same. Some are fully deductible, while others must be prorated based on the actual rental period.
Depreciation of Furniture and Appliances.
All furniture and equipment included with the rental property (such as sofas, beds, washing machine, fridge, etc.) can be depreciated at a rate of 10% per year over 10 years.
Example:
If you bought a new mattress for €600, you can deduct €60 per year for 10 years.
Depreciation of the Property (3%).
You can deduct up to 3% per year of the construction value of the property (excluding the value of the land). This accounts for the wear and tear of the property through use.
Simple example:
If the cadastral value of the building (excluding land) is €100,000, you may deduct €3,000 per year.
How to optimise your rental tax return.
Keeping a clear record of all income and expenses related to your holiday property is essential to optimise your tax return. The key lies in understanding which expenses can be deducted and in what proportion, as well as applying the correct tax treatment in each case.
At TempleCambria our team of specialist tax lawyers can help you:
• Maintain accurate rental accounting records.
• Calculate and apply all eligible deductions.
• Submit your Personal Income Tax (IRPF) or Non-Resident Income Tax (IRNR) return.
• Respond to any requests or audits from the Spanish Tax Authority (AEAT).
ÁLVARO MORALES SOUSA
PARTNER – LAWYER
CUSTOM REPRESENTATIVE
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