Tax issues about your holiday home
Below we offer you a brief summary for the taxation of your property used as a vacation rental house. This is a Summary of the correct way to tax for single-family homes with valid or provisional license registered in the Ministry of Tourism of the Balearic Government.
The rents of private homes for the accommodation of tourists are subject to the payment of threetaxes:
- Tax on tourist stays in housing (regional tax)
- Value Added Tax (VAT)
- Personal Income Tax (IRPF)
The tax on tourist stays is an indirect tax, which works similarly to VAT. This means that the owner or operator of the home must collect the tax from the taxpayer (the tourist) and then deposit it in the Treasury of the Balearic Islands.
First, we must consider that the rent and sale of housing is in principle exempt from VAT. However, section "e'" of article 20.1.23ºb of the LIVA establishes that this exemption will not be effective in the case of leases of apartments or furnished homes when the lessor is obliged to provide any of the complementary services of the hotel industry, such as restaurant, cleaning, laundry or other similar. In these cases, the person who gives the house to the user has the obligation to issue VAT invoice, even if only one is the service provided.
The aspects to consider are the following:
- You must make the quarterly VAT declaration at 10%.
- You can deduct all direct expenses of the property such as: IBI, garbage, supplies, insurance, community expenses and real estate commission
- You must invoice the final customer with an IVA of 10%.
- The real estate or intermediary company charges its commission plus 21% VAT.
- The owner must not make model 130.
- The owner must declare the annual benefit in the section: Real estate capital yields of his annual income
- It is not necessary to register in finance under the heading: Leases of business premises.
- When the landlord is obliged to provide any of the complementary services of the hotel industry, such as restaurant, cleaning, laundry or other similar. That is, in these cases the person who gives the house to the user has the obligation to issue VAT invoice.
Do not hesitate to contact Balearic Properties if you have any questions regarding the taxation of your property in a holiday rental situation. Our offices are in Mallorca, where we will assure you an excellent service and personalized advice.