IRPF (Impuesto sobre la Renta de las Personas Físicas) - Personal Income Tax (Personal Income Tax)

The most common scenario for most, when you start in the tourist rental business, is that you are an only person. That is, you have not created a company (legal entity). In this case, you must file the Declaración de la Renta or IRPF (Income Tax Declaration), a progressive tax levied on the income of people residing in Spain. It must be declared annually, although if you are self-employed, you usually have to submit it quarterly with Form 130.

It is the most common among tourist accommodations, so we will delve deeper into this tax and its deductible expenses.

The IRPF distinguishes two types of income based on the services offered:

1. If your accommodation offers hosting services, the IRPF will consider your income as Rendimientos de las Actividades Económicas (Income from Economic Activities). In this case, when you make your income statement, you must place your earnings in the income from the economic activities section.

   There will be a lot of deductible expenses that you can deduct, with the idea that the IRPF you have to pay is less. In theory, all those expenses related to the provision of your economic activity will be deductible, although on some occasions it will not be as easy to justify them as in the case of the companies in the IS - Impuesto de Sociedades (Corporation Tax).

2. On the other hand, if your accommodation does not offer hosting services, your income will be considered Rendimientos de Capital Inmobiliario (Real Estate Capital Income).

   In this second scenario, when making the declaration, you must detail them in the real estate capital income section.

   In this case, the deductible expenses will be slightly less. When sharing periods in which your property is not rented for tourism, you must justify that said expenses occurred while it was used for tourism. There will be some easily attributable ones that will only happen when you host your guests. But there will be many other global expenses, such as the building community expenses, the garbage rate, amortisation, electricity, etc., that will happen both when the property is occupied, and when it is empty. For these, you must make an apportionment for the period in which they were caused as a consequence of the tourist activity.

   Besides, you will not be able to use the 60% deduction applied alquileres de viviendas de uso habitual (habitually used housing rentals) since, in this case, your accommodation does not offer permanent accommodation but temporary (tourist) accommodation.

   Another aspect to remember is that you must also pay what is known as Imputación de Renta Inmobiliaria (Real Estate Income Imputation) for the time your property has not been rented for tourism, as it is the case with any other property outside of tourist activity.

Below we name some examples of the most common deductible expenses in the IRPF tax in both returns and we classify them as apportionable or not to give you an idea:

Apportionable:

• IBI (Real Estate Tax);
• Garbage Rate;
• Water supplies, electricity, gas, internet;
• Financing interest;
• Community fees;
• Home insurance premium;
• The amortization of the property.

Not prorated:

• The commissions are charged by portals such as Booking.com and Airbnb for advertising your accommodation. You should not allocate them because they only happen when you have a reservation;
• The tourist tax of your city if your city council forces you to pay it and not your guests;
• Maintenance and repairs for the stay of your guests;
• A consultancy with an expert in Tourism Marketing, to improve the promotion of your accommodation.

Another detail that you should keep in mind is that there will be a limit on deductible expenses. At most, its total sum may not exceed the amount of the income obtained in the year that we declared. If they exceed it you can deduct the rest over the next four years.