Find out what your obligations are, as the property owner, regarding Personal Income Tax (IRPF)
The rental of tourist or holiday apartments is an increasingly widespread phenomenon. Demand continues to grow, and for many owners, it represents an excellent opportunity to generate high returns on their properties.
Similarly, their structure is also becoming increasingly complex. These types of contracts are now not only made directly between landlord and tenant, but also through management companies and intermediaries who sometimes operate via online platforms or apps (e.g., HomeAway or Airbnb).
The purpose of this article is to analyze the applicable taxation for the property owner based on the type of contract they enter into.
How are these contracts taxed in your Income Tax Return?
In general, income from the lease or transfer of rights of use or enjoyment of a property is taxed as income from real estate capital (Articles 22 et seq. of the Spanish Personal Income Tax Law). Therefore, owners can deduct the expenses listed in Article 23 and benefit from the applicable reduction when the lease is for residential use.
However, in certain cases, the income must be classified as income from economic activities. Specifically:
- When, for the management of the rental activity of real estate, at least one person employed under a full-time employment contract (art. 27.2 LIRPF).
- When, in addition to simply renting the property, the owner is providing other types of services that involve the organization of a business activity, such as a hotel, the property is thus considered to be used for an economic activity.
DGT queries dealing with this distinction: DGT 7-6-01; 23-7-01; CV 16-4-15; DGT CV 25-4-05; DGT CV 23-6-05; CV 13-1-14; DGT CV 29-6-06.
In the second part of this article we will look at the taxation of this type of contract in the area of VAT
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A graduate in Law and with a Master's degree in Tax and Financial Management from the University of Barcelona, he also holds a Postgraduate Diploma in New Technologies Law from ESADE. He specializes in tax and corporate law.
Before joining Àmbit Assessor as manager in 1999, he worked as head of the Tax and Accounting department at the Busquets Terradellas law firm.
For years, he combined his work with teaching, serving as a professor of Public Finance and Tax Law at the Open University of Catalonia.
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