Where taxpayers get caught out
Without invoices in the owner's name, expenses can be rejected in an inspection. Card statements or agency summaries are not always enough.
Expenses you can deduct
| Expense | How it is deducted |
|---|---|
| IBI and waste collection tax | Proportion of days rented |
| Community fees | Proportion of days rented |
| Home insurance | Proportion of days rented |
| Utilities paid by the owner | Those linked to the rental periods |
| Repairs and maintenance | Full amount if done for the rental; not improvements |
| Agency, management and platform fees | Full amount |
| Mortgage interest | Interest (not capital) on the loan to buy or improve |
| Depreciation | 3% a year of the building value, see the depreciation guide |
Apportioning by days
A villa rented for 120 days deducts 120/365 of its annual costs. Expenses incurred only because of the rental, such as cleaning between guests or platform commissions, are deducted in full in the quarter they relate to.
Repairs or improvements
Repairs keep the property in its condition and are deductible. Improvements, such as adding a pool or a new kitchen, increase the acquisition value and are recovered through depreciation and when selling. See depreciation.
Quarterly returns
Expenses are deducted in the quarterly modelo 210 of the period to which they relate. Expenses cannot exceed the rent of a quarter to create a negative result. See rental income tax and holiday rental tax.
An illustrative example
Based on situations we commonly see; not a specific client. A French owner of a flat in Ciutadella had always paid 19% on the gross rent. We collected the invoices for IBI, community, insurance and repairs, added depreciation and corrected the open years, recovering a large part of the tax paid.
How Castell.tax can help in Mallorca, Ibiza and Menorca
We file the Spanish taxes of non-resident owners every year: imputed income, quarterly rental returns, the tax on a sale and the refund of the 3% retention. We work in English and German, by email and video call, so you never need to travel to Spain. We also check past years and correct them before the tax agency writes to you. See our non-resident tax service or contact us for a fixed-fee quote.
This page is published by Castell.tax, the tax practice of Castell.law in Palma de Mallorca. It is general information; tax rules and rates change, so check your case with us before filing.
Not sure what you owe? Ask before the deadline
Send us your situation or the letter you received. A tax adviser will tell you what applies, what it could cost and what to file.
Common questions from clients in Mallorca, Ibiza and Menorca
Can UK owners deduct expenses?
No, residents outside the EU and EEA pay 24% on the gross rent.
Are mortgage repayments deductible?
Only the interest, not the capital.
Is cleaning deductible?
Yes, if it relates to the rental and has an invoice.
Can expenses create a loss?
Not as a non-resident; the minimum quarterly result is zero.