Having a tourist property generates an interesting source of income and a series of obligations with the Tax Agency. If you own a estate of this type or you are considering investing in one, find out about all the taxes that you will have to pay. From Hermes & Mathew we offer all the useful advice.
Properties featuring a tourist license, have also to be accountable to the Tax Agency. At one point, the Tax Agency issued a statement making a clearence about the taxes for tourist rentals in order to avoid any unpleasant surprises with this collection agency. Broadly speaking, the AEAT reminds that landlords are obliged to declare the incomes received from renting the property and, when the estate is not rented, make a property income allocation. In addition, a tourist apartment can also have to pay VAT.
Returns on capital assets or economic activities?
As a general rule, the income obtained from renting a tourist apartment is considered a real estate income and, therefore, must be declared in the owner’s annual IRPF declaration. To be considered real estate returns, it is mandatory for the owner to rent the property for periods of time without complementing it with services of the hotel industry (laundry services, room service, etc.). The only exceptions to this condition are cleaning service and change of sheets prior to the entry of guests or their departure, and the delivery or collection of keys.
And, what happens when the apartment with a tourist license is not rented? How does the Tax Agency consider it? For those periods in which the tourist property is not rented, a property income allocation must be settled. How is it calculated? The amount is the result of applying the corresponding allocation percentage (1.1% or 2%) to the property’s cadastral value, based on the number of days that it has not been rented.
When submitting the tax return, expenses neeeded to obtain income, such as, those that have to do with conservation and repair, fees, etc. will be evidently deducted. On the other hand, a tourist flat can not benefit from the 60% bonus that is included in IRPF (Personal Income Tax Law) because,this housing does not cover a permanent need but only tempory.
Incomes will stop being considered returns on capital assets and will become economic activities when the rental is complemented with services of the hotel industry (laundry, catering, etc.)
Tourist property and Value Added Tax (VAT). Does it apply or not?
This is one main question asked by many owners of properties with a tourist license. Only tourist properties that provide hotel industry services will be subject to VAT and, in this case, they should be taxed at the reduced rate of 10%, just like a hotel establishment. In other cases, VAT will not have to be charged, but it will be subject to the Transfer Tax (ITP), which is obtained by applying the rate set by the Autonomous Community on their taxable base. If the Autonomous Community has no fixed rate, the Tax Agency offers a scale to follow.
Tourist property owners – Obligations
Although it is not a tax, it is important to remember that from January 1, 2018 it is mandatory to report on the cession of use of properties for tourism purposes. The 179 Form must be submitted by the persons or entities that act as intermediaries when renting the property and, in particular, the so-called “collaborative platforms” that intermediate in these rentals.
This obligation implies that, in view of the next 2018 Income campaign, when preparing the personal income tax declaration, the taxpayer who owns a tourist property must take into account that the Administration will already have the rental information that, very probably, will already be included in the draft of the income for 2018.
For all these tax matters, it is best to call upon a tax advisor who will take care of all the necessary procedures to comply with all these tax obligations.
And if you are considering investing in a property with tourist license, please consider contacting us, as Hermes & Mathew is specialist and leader in this type of propertis, as we offer the best properties portfolio in Barcelona.