Taxing rent from a home abroad when you live in Spain

Key rules

• Worldwide income: As a Spanish resident, you report rent from a home abroad in Spain, converted to euros.
• EU/EEA expenses: For property in the EU/EEA, expenses with a Spanish equivalent are deductible if proven by invoices.
• Non-EU/EEA expenses: For property outside the EU/EEA, only the standard Spanish list of expenses is deductible.
• Double tax credit: You can credit the lower of the foreign tax paid or the Spanish tax on that income, with four years to carry forward any excess.

Do you report foreign rent in Spain?

Yes. As a Spanish tax resident, you pay tax in Spain on your income from anywhere in the world. Rent from a home abroad goes in your IRPF return, in the same real estate income section as Spanish rent, marked as foreign property. Convert every amount to euros at the exchange rate on the day the income was earned.

You may also owe tax in the country where the home is. That is normal, and the credit below stops you paying twice on the same income.

Which expenses can you deduct?

It depends on where the property is.

Property in another EU/EEA country. Spanish rules apply, as for a Spanish rental. You can deduct the actual expenses you had abroad when they match a type of expense Spanish rules allow, and you can prove them with invoices. Spanish limits and depreciation rules still apply. An expense that exists only under the foreign country's law, with no Spanish equivalent, is not deductible.

Property outside the EU/EEA. You can deduct only the standard Spanish list:

• local property taxes and charges
• community fees
• mortgage interest and financing costs
• repairs and maintenance
• insurance and utilities
• management fees
• depreciation

Interest plus repair and upkeep costs together cannot be more than the gross rent. For depreciation, you can deduct 3% a year of the higher of purchase cost or cadastral value, excluding the land. The wider EU/EEA approach does not apply here.

In both cases, keep documents for every expense and convert them to euros. The documents list and the records checklist below show what to keep.

How do you avoid double tax?

Under Spain's tax treaties, the country where the property is can tax the rent. Spain can tax it too, but must relieve the double tax. Most often Spain does this with a credit. A few treaties use exemption for certain income. Read the treaty with the country where your property is, because the details differ.

With the credit, you deduct the lower of two amounts:

• the tax you actually paid abroad on that income, if it is a tax similar to IRPF
• the Spanish tax that falls on that same foreign income

Rent sits in the general part of your return, so the Spanish tax is worked out there. Treaty limits on the foreign tax can reduce what qualifies.

To claim it, you need a certificate or tax receipt from the foreign tax authority showing what you paid.

Timing. Claim the credit in the year of the income. If you pay the foreign tax in a later year, claim it for the year you paid it, using a complementary return. Any credit you cannot use can be carried forward for four years.

Foreign property declaration

If your property abroad is worth more than 50,000 euros, you may also have to file Modelo 720. The FAQ below covers it.

Documents you need

• Certificate or tax receipt from the foreign tax authority showing the tax you paid on the rent, needed to claim the foreign tax credit.

• Invoices and receipts for the expenses you deduct against rent from a property outside the EU/EEA, with the amounts converted into euros.

Landlord records to keep for Spanish and foreign rentals

Landlord records to keep

• Keep the signed lease for each property, Spanish and foreign.

• Save rent receipts or bank statements that show every payment you received.

• File full invoices and receipts, with the supplier's tax ID, for repairs, maintenance, community fees, insurance and utilities you paid.

• Keep the IBI property tax bill and the bank's mortgage interest certificate for each property.

• Keep the record of the deposit (fianza) lodged with the regional body for your Spanish let.

• Keep the purchase deed and the cadastral value to back up your depreciation deduction.

• Keep agency fee invoices, tenant details and, for holiday lets, platform statements and the registration number.

• Collect the foreign tax return or assessment, and the proof you paid that tax, to claim the double-taxation credit.

• Keep foreign rent statements, expense invoices and property tax bills, and convert each receipt to euros at the exchange rate on its date.

• Arrange a sworn or plain translation of foreign documents if Hacienda asks for one.

• Keep all rental records for at least four years, and up to ten years for losses or amounts carried forward.

Frequently asked questions

Do I have to file Modelo 720 for a home abroad?

Yes, you may have to file Modelo 720 for a property abroad if its value is over 50,000 euros. This is a separate declaration of assets held abroad, filed in addition to reporting the rent in your income tax return.

Can I deduct expenses that only exist under foreign law?

No, expenses allowed only under foreign law that have no Spanish equivalent are not deductible. For property in another EU/EEA state, real expenses paid abroad are accepted when they match an expense Spanish rules allow, and you can prove them with invoices.

What if I pay the foreign tax in a later year than the rent?

You can claim the credit in the year you actually paid the foreign tax, by filing a complementary return. Normally the credit is claimed in the year of the income.

What happens if my foreign tax is higher than the Spanish tax on that rent?

The credit is capped at the Spanish tax due on that foreign income, so the extra foreign tax is not refunded in Spain. You can carry the unused excess forward for four years. Some treaties limit the foreign tax that qualifies, so check yours.