How to declare a holiday-let property in your Spanish tax return

Owners of viviendas de uso turístico (VUT, holiday-let properties) must declare in their tax return the income from letting and deduct only the expenses that are tax-deductible. When no hotel-type services are provided, the result is usually taxed as income from real estate capital; if there is an organised activity with additional services, the tax treatment may change.

Income, deductible expenses, VAT and imputed income that the owner needs to review.

In this article, we want to give you a complete guide to the key points you need to bear in mind when filing your return, so that you can meet your tax obligations properly and make the most of the tax benefits available. For the full picture, also take a look at the tax position of a holiday let.

1. Regulations in your autonomous community

The first thing to bear in mind is the regulations that apply in your autonomous community. For some years now, the autonomous communities have had the power to regulate holiday-let properties, so it is essential that you find out about the specific rules in your area. The single national register that was also required from 2025 is no longer compulsory: the Tribunal Supremo (Spain's Supreme Court) struck it down in May 2026, as we explain in what changes after the Supreme Court ruling.

2. Types of rental and hospitality services

The law distinguishes between different types of holiday-let rental, depending on the hospitality services you offer and who handles the management. These types include holiday lets with hospitality services, holiday lets without hospitality services and rentals managed by an individual or a company. Each type has different tax implications, so it is crucial that you identify which one fits your situation:

1. Holiday let with hospitality services: This falls under heading 685, "Alojamientos turísticos extrahoteleros" (non-hotel tourist accommodation). It is characterised by including hospitality services on top of the legal minimum (cleaning and changing bed and bath linen after guests leave), such as reception and customer service, daily cleaning and changing of bed/bath linen and other specific services such as laundry, newspapers, luggage storage or food services. As in hotels, these services carry VAT at 10%.
2. Holiday let without hospitality services: As no hospitality services are offered, this type of rental falls under heading 861.1, "Alquiler de viviendas" (letting of homes). It covers any property used as a home that is let on a seasonal or holiday basis. This is probably the one that most readers and clients of beBalmy, a holiday-let management company, will fall into.
3. Rental operated by a management company: The last type, handing over the holiday-let property entirely to a third party or agency to operate it, falls under heading 861.2, "Alquiler de locales industriales y otros alquileres" (letting of industrial premises and other rentals).

3. Impuesto de Actividades Económicas (IAE, Spanish business activity tax) and VAT

How IAE and VAT apply also varies depending on the type of rental you carry out. It is important to know which IAE heading your activity should be registered under and what VAT rate you should apply on your invoices.

1. If you offer hospitality services, as we mentioned above, you will have to issue invoices with VAT at 10%.
2. If you use platforms such as Airbnb or Booking, you will pay a commission for their management services. These are already subject to VAT at 21%, so when you work out the net return you have made, they will be a deductible expense for you.
3. In the same way, if you hand over the management of the property to a holiday-let management company such as beBalmy, the services provided will be subject to VAT at 21%, which can later be deducted as expenses against the return.

Finally, if you have handed over the operation to a management company (the third type of rental), under the Ley de Haciendas Locales (Local Finance Act), if the net turnover is below €1,000,000 you will not have to pay IAE. However, even if you do not pay this tax, you must still meet your registration obligations by filing modelo 036 or 037 (the census registration forms with Hacienda, the Spanish tax agency).

4. Impuesto sobre la Renta de las Personas Físicas (IRPF, Spanish personal income tax)

How IRPF applies is a fundamental point you need to understand. Depending on whether or not you offer hospitality services, your income will be treated as income from an economic activity or as income from real estate capital. Each case has different implications in terms of deductions and deductible expenses. It is important that you correctly identify which category you belong to and make the right calculations for your tax return:

1. IRPF with hospitality services: The income obtained will be dealt with under the section for income from economic activities in your tax return. Besides the services, it also goes in this section if you have at least one person on a full-time employment contract.
2. IRPF without hospitality services: When your holiday home or flat does not offer hospitality services, apart from cleaning on check-in and/or check-out, this income is considered income from real estate capital. To find the exact figure, you will have to subtract all deductible expenses from your gross income, as we explain in the next section. Bear in mind that if you only let the property for a few months (for example, only in summer), for the months in which your property was empty you will have to declare an income imputed by Hacienda, since it is considered that you could have earned income but chose not to. To do this, you must calculate 1.1% or 2% of your property's valor catastral (cadastral value), divide it by 12 months and multiply it by the time it was empty.
3. IRPF with a management company: Finally, if you have an operating contract for your property, that is, if you are the landlord of a property but do not carry out the economic activity yourself, your income is declared as income from real estate capital, and for expenses you will have to make the same calculation as in the previous case. This is the case for some of our clients at beBalmy, where we agree a fixed monthly payment and in return the owner can forget about everything.

5. Deductions and deductible expenses

For both IRPF and IAE, there are deductions and deductible expenses that can help you optimise your return and reduce your tax burden. These expenses may include:

1. The Impuesto sobre Bienes Inmuebles (IBI, Spanish property tax)
2. Waste collection tax
3. Utilities (water, electricity, gas, internet)
4. Comunidad de propietarios (owners' association) fees
5. Management fees paid to an external company such as beBalmy
6. Home insurance
7. The proportional part of the property's depreciation if you have a mortgage
8. … and anything else that arises from keeping the property itself in good order.

Bear in mind that you can only allocate the expenses corresponding to the days or months in which your property was let. For example, if you start letting your property in the third quarter or take a break in between, you will not be able to include these expenses or, at least, only the part corresponding to the time it was let. Knowing about and making use of these deductions will let you maximise your tax benefits.

Key points for owners of holiday-let properties

In short, owning a holiday-let property means meeting certain tax obligations and knowing the regulations in force in your autonomous community. By understanding the different types of rental, hospitality services, how IAE and VAT apply and the implications for IRPF, you will be in a better position to file your tax return correctly. And do not forget to consult a tax adviser or expert in the field to make sure you comply with all the regulations and make the most of the tax benefits available! If you have not done so yet, also check your obligations with SES Hospedajes. If you are not sure how to do it and would like us to help you with your property, remember that you can contact us through this form.