Renting Out Property in Spain
One way of making some money from your holiday property is to
rent it out. Most holiday homes are occupied for less than three months a year.
Your overseas home is an asset that could generate several hundred pounds a
month for you.
If you want to maximise your returns from renting remember that
the property must be of the kind that can be easily let out. Things to consider
may be that it is close to the sea, reasonably near a major airport and not too
isolated from shops, bars and restaurants. Rental returns of around 3% should not be hard to achieve
from renting your property to summer visitors in the school holidays.
Renting Property Out on a Mortgage
Mortgage lenders typically will not lend to a property that is
going to be let out long term because of the risks involved. Getting rid of
unwelcome tenants can be a long drawn out process.
However, most lenders are prepared to take a blind, even
benevolent, eye to renting out the property for holiday lets to family, friends
or work colleagues. It makes sense to all parties, the more a holiday home is
visited, the more secure it is from a security viewpoint. Regular use ensures
that the state of upkeep is better. If something goes wrong with the property
then the sooner that it is found out and sorted the better. And that's as
important for the mortgage lender as it is to the homeowner.
Spainish Income Tax on Property Rentals
Even if nobody else mentions it, you are liable to Spanish
income tax on any income you have in Spain arising from rentals. If you are a
resident, you should declare your rental income as part of your earnings and
you will be taxed at your normal income tax rate. If you are a non-resident,
you are subject to tax on income arising in Spain at the flat rate of 25% -
although it has to be said that few owners actually seem to declare a great
deal of income from their property!
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