Annual housing expenses are only deductible based on rental days

The deductibility of expenses associated with a property intended for tourist rental frequently raises doubts regarding which items can be included in the taxable base of Non-Resident Income Tax (IRNR). The Dirección General de Tributos (DGT) has specified the scope of this deduction in a recent binding ruling.

What the DGT has resolved

The administrative body has established that annual expenses, such as depreciation, Real Estate Tax (IBI), or insurance premiums, may only be deducted in proportion to the number of days during the tax period in which the property is effectively leased. This implies that it is not possible to apply the total annual expense if the property has not been available for rent throughout the entire fiscal year.

Regarding repair and maintenance expenses carried out during periods of rental expectation, the DGT points out that these must be aimed exclusively at the future generation of income and not at the owner's personal enjoyment. In the event that no income is generated in the year in which such repairs are carried out, these expenses may be deducted in the following four years, provided that the legal limits established in current regulations are respected.

What this means for you

If you are a non-resident owner with properties in Spain intended for rental, you must take into account that the calculation of your deductible expenses is not linear. The administration requires a breakdown based on the timing of the lease for fixed annual costs.

For owners who keep the property vacant but advertised on tourist platforms, the deductibility of maintenance expenses depends on demonstrating that the purpose of the work or expense is to generate income and not for private use. The absence of income in a fiscal year does not prevent the deduction of repairs, but it conditions their application to subsequent fiscal years.

What you should do

It is necessary to maintain rigorous control over the periods of property occupancy and the documentation that proves the purpose of the repair expenses. To ensure compliance with the regulations of the TRLIRNR and the LIRPF, it is recommended to:

• Document the exact rental days through contracts and platform records.
• Clearly differentiate between maintenance expenses for personal use and repair expenses for economic activity.
• Manage the application of repair expenses in subsequent fiscal years if no income was obtained in the year they were executed.