Taxes and Costs for Owners When Renting a Property in Mallorca, Spain
Renting out a property in Mallorca can be a great way to generate additional income, but it's important to be aware of the various taxes and costs that you'll be responsible for as a property owner. These taxes and costs can vary depending on the type of property you own and your personal circumstances. Here's a guide to help you understand the different taxes and costs that you'll need to pay as a property owner in Mallorca when renting out your property.
1. Non-Resident Income Tax (Impuesto sobre la Renta de no Residentes)
The Non-Resident Income Tax, also known as Impuesto sobre la Renta de no Residentes, is a tax that is applied to the rental income earned by non-residents. The tax rate can vary depending on your personal circumstances, with rates being higher for non-residents and lower for residents. As a property owner, you'll be responsible for paying the Non-Resident Income Tax if you decide to rent out your property in Mallorca and you are not a resident.
2. Value Added Tax (IVA)
Value Added Tax (IVA) is a tax that is applied to the rental income earned. The standard rate of VAT is 10%. However, it may vary depending on the area where the property is located and the type of property. As a property owner, you'll be responsible for paying VAT if you rent out your property.
3. Property Tax (Impuesto sobre Bienes Inmuebles)
The Property Tax, also known as Impuesto sobre Bienes Inmuebles (IBI), is an annual tax that is applied to all properties in Spain. The tax is calculated based on the cadastral value of the property, which is determined by the local government. The tax rate can vary depending on the location of the property, with rates being higher in urban areas and lower in rural areas. As a property owner, you'll be responsible for paying the IBI on an annual basis, even if the property is being rented out.
4. Community Fees (Cuotas de Comunidad)
Community fees, also known as Cuotas de Comunidad, are charges that are applied to property owners who are part of a community of owners, such as an apartment complex or gated community. These fees are used to cover the costs of maintaining common areas and facilities, such as gardens, pools, and security. As a property owner, you'll be responsible for paying community fees on an annual basis, even if the property is being rented out.
Tourist Tax (Ecotasa)
As of 2016, Mallorca introduced the tourist tax, also known as Ecotasa. This tax is levied on all visitors to the island and is collected by the hotel or property owner. The tax ranges from €0.50 to €2.50 per night depending on the type of accommodation and the time of year. Owners must register with the local town hall and obtain a license to collect the tourist tax, and failure to do so can result in fines.
Owners are also responsible for obtaining insurance for the property, including liability and contents insurance. This is typically included in the rental price and passed on to the tenant.
Maintenance and Repairs
As the property owner, you are responsible for any maintenance and repairs that are required. This includes regular maintenance such as cleaning and gardening, as well as any repairs that may be needed due to wear and tear or damage caused by the tenant.
Owners may also incur legal fees when renting out a property in Spain. This includes fees for drafting a rental contract, as well as any legal fees that may be incurred if a dispute arises with the tenant.
Advertising and Marketing Costs
Owners may also need to pay for advertising and marketing costs to promote their property for rent. This includes listing fees on rental websites, creating brochures or virtual tours, and hiring a professional photographer.
However, property management companies like ours can provide these services to owners at a lower cost, eliminating the need for owners to pay for these expenses individually.
Our agency can handle all aspects of advertising and marketing, from creating professional listing descriptions and taking high-quality photographs to manage online listings and creating virtual tours. By choosing to work with a property management company like ours, owners can save time and money on advertising and marketing costs while ensuring that their property is effectively promoted to potential renters.
Some owners may choose to hire a property management company to handle the day-to-day aspects of renting out their property. This includes finding tenants, collecting rent, and handling maintenance and repairs. These services typically come with a management fee, which can range from a few percent to a few hundred euros per month.