# The Costs Involved In Running Rentals On Your Property



## StevejR1 (May 21, 2013)

Hi All,

In our continued search for properties and a new life in Andalucia Spain, one of the options we've considered is a property which has rental potential. 

It's basically the ability to rent out half of the house, and also a one bedroom apartment, also adjoined to the house. So the rentals are not separate to the family home, or in their own building/grounds etc, they are just a section of the house we'd be living in.

My question is what costs, and tax implications, are there if I was to try and do rentals from our own home?

I'm aware that you can apply for an official tourist license, which allows you to advertise through official sources...and I'm being told this costs around €100 (per year I'm assuming?).
But I'm wondering if the rentals would have to be declared/run as a business?..and would I have to register it on a self employed business basis?(autonomo?)....or would the income just be declared on our yearly tax return?

I'm thinking that the income might be around €18,000 per year if things went well.

I'm a bit reluctant to have to rely on the income of any rentals, but then if it takes off it offers a big stability in our future lives..but not if there are a lot of costs and red tape involved in getting them up and running, and then cost a fortune to keep going because it's classed as a business?

Many thanks for any help and advice.

Steve


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## snikpoh (Nov 19, 2007)

StevejR1 said:


> Hi All,
> 
> In our continued search for properties and a new life in Andalucia Spain, one of the options we've considered is a property which has rental potential.
> 
> ...



I'm doing exactly what you are proposing - we have two 2-bed apartments in our villa which we rent out.

As we are in the region of Valencia, there is no tourist licence to pay.

We declare any income and are taxed annually. You do not have to run it as a business - in fact, I was told that I could NOT declare myself as autonomo just because I had some rental properties.

We advertise through a couple of dedicated sights and have associated costs wit that. Our annual income is nowhere near the figure you quote - far less.


I would say, view any income as 'pin money' and nothing more.


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## StevejR1 (May 21, 2013)

Thanks for the reply 

I have tried to be realistic with the rental prices, and would rent them as a two day minimum, rather than just weekly, because I think this would bring in more bookings, and over a longer period than the summer months. And I was going to rent them through a couple of the internet owners sites, that have small annual charges...and then set up a personal website for bookings if it became financial viable (...plus I'm a numpty with computers!!).

There was always the option to rent the one bedroom apartment as a long term let too...less rental, but more of a secure income.

I have been warned not to rely on rental income...and that is the risk with this property in particular, if it doesn't take off we'd be in trouble, so it's a (huge?) risk. It is a gamble that we need to decide if it's worth taking....but if it did take off we'd be better off long term than buying a cheaper property, with more savings to rely on.


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## Teadrinker (Mar 16, 2014)

Hello StevejR1
We use both the following on promoting our property, both do NOT have an annual charge, just the following charge on any bookings they get you.

Villarenters.com, 10% + Vat
Holidayletting.co.uk, 3% + Vat, free account


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## StevejR1 (May 21, 2013)

Thanks Teadrinker, I'll look into those


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## snikpoh (Nov 19, 2007)

I use VillaRenters (Rental Systems) but also use a subscription service as this can be more cost effective if you take a number of bookings - specifically HomeAway.

At £250 with HomeAway (plus tax), this is soon made up with bookings.


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## StevejR1 (May 21, 2013)

HomeAway, and OwnersDirect, were the two mediums we were thinking of initially. 

We've used them several times ourselves, with good results, and it seems a good package for owners and renters alike. Obviously no site can guarantee bookings, but if the price is attractive, and the rental is at least getting the exposure, then hopefully it would work.

......our concern is still whether to have to rely on that income, and the risk involved


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## mrypg9 (Apr 26, 2008)

StevejR1 said:


> HomeAway, and OwnersDirect, were the two mediums we were thinking of initially.
> 
> We've used them several times ourselves, with good results, and it seems a good package for owners and renters alike. Obviously no site can guarantee bookings, but if the price is attractive, and the rental is at least getting the exposure, then hopefully it would work.
> 
> ......our concern is still whether to have to rely on that income, and the risk involved


I've owned rental properties in the UK and Canada. The income from these long-term rentals was never viewed as part of my assured income. When I'd had enough of renting and the cost of the repairs that go with rental income I sold the properties.
I wouldn't consider renting in Spain, certainly not long-term. I've heard too many horror stories. Holiday lets may be different.
If you would be relying on any rental income to live comfortably in Spain, I would say it's far too great a risk.
In my view you can either afford to live here on your pre-existing income or you can't.
But others, less risk-averse, would disagree.


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## StevejR1 (May 21, 2013)

I think this is my concern....I'm not a gambling man either, and I've always preferred the safest option. Many wouldn't worry, and take it as part of life's uncertainty, but when you're looking at your future lifestyle the risk doesn't seem worth taking..

.....I'd rather try and gather as much savings as I can to try and safeguard our future.....that still not be enough, but at least it's there from the start...


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## Cazzy (Nov 23, 2008)

We get a lot of bookings from airbnb, they take a small amount when you get a booking so no upfront costs.


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## Madliz (Feb 4, 2011)

Interesting article about Cataluña fining Airbnb €30,000 for " illegally commercializing short-stay apartment rentals that are not listed on the Catalan Tourism Register." It seems they are checking and fining websites, rather than individuals, so far at least.

Catalonia fines Airbnb â‚¬30,000 for offering illegal tourist home rentals | In English | EL PAÃ�S


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## Madliz (Feb 4, 2011)

Now Madrid has announced their rules for holiday rentals, among them being minimum stays of five days.  

Madrid legaliza las viviendas turísticas pero con estancias mínimas de cinco días - Noticias de Vivienda

Lots of talk about unfair competition with the hotels. Who will the losers here? The little guys trying to earn a little extra from their property (not their home, as one of the rules is that you cannot live there and rent it out to tourists) and the little guys wanting to stay a night or two here and there. They soften it with talk of raising standards and looking after the rights of the users, plus raising standards. I think the result will be less tourists thus less revenue for the regional and national government. If I wanted to tour a country and stay a night or two in lots of places, I wouldn't want to stay in hotel, nor could afford to, I would therefore look elsewhere.

Is the population clammering for these changes? I think not. It appears to be another instance of big business pulling the strings.


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## Horlics (Sep 27, 2011)

It's a difficult one. I am a big fan of Airbnb and have used it several times very successfully. That said, I have a lot of sympathy for B&B operations that are subject to health and safety and other rules and regulations, and therefore have a high base cost in running their businesses. They may have invested in building up their businesses over many years and suddenly these disruptive technologies come along. It must be very tough for them.

The rule-makers are national and regional governments. The people in them are of course all public sector employees who are paid using our taxes to create red tape, it seems. Which brings me onto.....

Most of all though, I object to California-based venture capital funded operations sucking cash out of our economies and paying no taxes. Airbnb, Uber, and the like fall bang into this category.

So we pay people to create rules that are ineffective against the new technology and the businesses it drives. We pay them again to struggle against the disruptive technologies. Meanwhile, the taxes we use to pay them with are diminished because so much money goes out of our economies these days.

As I keep saying, the impact of the Internet is only just beginning to be felt.


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## Madliz (Feb 4, 2011)

I sell on eBay and Etsy and each site takes a percentage of sales. I believe Airbnb to be similar. People hang their rentals on property websites or holiday home letting sites, and similar terms or fees apply. What is wrong with that? Nobody is forced to use them, either as sellers or buyers.

B&B operations are commonly run by people who 'live above the shop'. Will that be outlawed now? Who benefits from this other than the large scale operators? I think tourists will vote with their feet and every sector will therefore be worse off - B&B owner, tourist, local businesses, transport companies, the list is endless. Tourism is currently a major contributor to Spain's economy. Surely - especially now - everything should be done to encourage more visits, however long or short, luxury or economy?


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## mrypg9 (Apr 26, 2008)

Horlics said:


> It's a difficult one. I am a big fan of Airbnb and have used it several times very successfully. That said, I have a lot of sympathy for B&B operations that are subject to health and safety and other rules and regulations, and therefore have a high base cost in running their businesses. They may have invested in building up their businesses over many years and suddenly these disruptive technologies come along. It must be very tough for them.
> 
> The rule-makers are national and regional governments. The people in them are of course all public sector employees who are paid using our taxes to create red tape, it seems. Which brings me onto.....
> 
> ...


You object to these companies sucking cash out of our economies without paying taxes. I totally agree.

But then youi disapprove of 'public servants' making rules to stop this..

I thought elected representatives made the rules and public servants enforced them


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## Horlics (Sep 27, 2011)

It's interesting. What you are saying is that the arrival or Airbnb resulted in more people taking holidays to Spain. It may be true. It would be very interesting to know if that's the case.

What's wrong with American-based businesses selling lots of services and product in a country where they pay very little tax. Just wait and see.


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## Madliz (Feb 4, 2011)

> What you are saying is that the arrival or Airbnb resulted in more people taking holidays to Spain.


If that is directed at me, I never suggested that. I am just saying that many people prefer to stay a night or two as they travel around and Madrid's new rules mean they will driven to do that in a hotel.


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## Horlics (Sep 27, 2011)

To be clear, I lump the Civil Service and elected representatives together when I think about how they are funded. Sadly, I contribute to Cameron's pay packet.



mrypg9 said:


> You object to these companies sucking cash out of our economies without paying taxes. I totally agree.
> 
> But then youi disapprove of 'public servants' making rules to stop this..
> 
> I thought elected representatives made the rules and public servants enforced them


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## liverpool_expat (Jul 11, 2014)

/SNIP/

Regarding your questions. 

No, you don't have to be autonomo, but have to include it in your tax return. Also it's different wether you are resident or not, but it's not complicated.

Licences in Andalucía are only for "casas rurales"

Regarding flats and villas... there's no law yet in Andalucía. The central goverment, not long ago, signed a law in which this will be regulated by the "comunidades autónomas". Some have regulated toward aplying for licences, like islas baleares, and others have forbidden completely this type of rentals.

I've been in contact with the Junta de Andalucía lately, and they've told me that there's no law regarding holiday lets yet, so right now it's a grey area. It's not illegal, but it's not regulated.

But for sure will be in the future. Hope this has helped.


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