The traditional "long season".


We have all had a friend, acquaintance or relative who has made their real estate available to the real estate market, with the intention of making it profitable through the customary formula of rent as the tenant's habitual residence (long stay).
That is the principle that the Urban Leasing Law 29/1994 uses in its article 2 when speaking of leasing as a formula to satisfy the permanent need for housing.

Some have had very positive experiences renting for a long time with these tenants and others not so much, causing real unpleasant situations for the owners who, not only stop receiving the agreed rents for months, but also face the recovery of the same with fear without knowing in What conditions may the state of the property meet (destruction, dismantling ...) once possession is returned to them.

Negative experiences always end up discouraging owners who are often unprotected by slow and saturated justice.
We will not go into assessing the progress that has been made in this matter in order precisely to speed up eviction procedures, but I will briefly outline what some experts in the sector claim from the regulator (Government and Autonomous Communities)

The idea is to create a fence for those actors who act intentionally in bad faith and who cause so much damage to owners and therefore to other tenants who meet the conditions of the contract and who increasingly have more difficulties in accessing a housing due to the fall in the supply of housing in the real estate market.


A new perspective.


On the other hand, the holiday tourist rental is postulated as a safer and more profitable alternative than that of the conventional rental.

Not only because it considerably reduces the risk of default, the risk of damage or the risk of illegal permanence, but it is much more profitable.

It allows the home to be profitable through short-term rentals and also to have the home available for the owner to enjoy, when he or she needs it.

We can choose to give up the house in summer, which is when we can generally obtain more income and also have it closed for the rest of the year to better preserve the property.

The tax treatment is very similar: both formulas are framed within what the IRPF 35/2006 law classifies as income from real estate capital.
Net income is determined by the difference between income generated and expenses incurred.

Good manners.


Now, although the law in its article 23 cites verbatim that all the expenses necessary to obtain the returns will be deducted, the Tax Agency rejects the vast majority of these expenses based on various binding consultations from the General Directorate of Taxes.

These inquiries state that only expenses will be deductible in proportion to the number of effective days of occupation, which in practice means the loss of deductibility of a significant part of the expenses incurred.

For example, if an owner renews the bathroom and pays out € 3,000, having rented 90 days that year, only 25% of that amount can be deducted. However, this same improvement has made the owner see an increase in his income compared to last year, given that the state of the property has improved and the price per day of the stay has been increased.

Well, even though the relationship between the expenditure incurred and the increase in income is evident, the AEAT does not admit that the taxpayer has the right to deduct the amount in its entirety, but only in proportion to the number of actual days of occupation.


Counseling is vital.


In addition, on many occasions I have come across resolutions from the inspection units that rejected expenses made before and after the stays, which is precisely when the repair and maintenance work is carried out because they argue that they are not expenses related to the rent ...

And of course, as Article 105 of the LGT says, it is the taxpayer who has the burden of proof if he wants to assert his right, so I recommend asking the provider (a reform company for example) to detail the services performed well. in the home and include in the invoice the date of the provision of the service (within the period in which the villa was rented).

The advice.


In any case, the vacation rental is a proven, profitable and flexible formula.

Taxation can be ostensibly improved if it is articulated as a real economic activity (either complying with what is stated in article 27 of the personal income tax law that establishes the hiring of a full-time employee, or through a limited company).

It is true that the conventional rental has a tax incentive that the vacation rental does not offer and that is a greater reduction on the net returns. But of course, we already know the disadvantages of long-term renting.

I advise my investor clients to have official tourist rental management companies, to optimize returns and occupancy.


Know what is involved at all times.


Very experienced companies with a high degree of technology in their management processes such as the Abahana company (a company located in Moraira in Alicante) are a key agent in the development of this incipient industry.

Not only do they provide the owner with comprehensive assistance in the management of the villa to make their investment profitable, providing national and international guests with a high profile or upper profile, but they are also in charge of undertaking whatever actions are necessary for the provision of the service: reception and accommodation of guests with multilingual staff, services typical of the hotel industry, 24 guest assistance, repair and maintenance of the villa and anything else the guest needs during their stay as if it were a hotel.

This service increases guest satisfaction, loyalty and increases the level of competitiveness of the extra-hotel sector.
In addition, it has a specialized Fiscal department that advises the owner from the first day to be able to plan the fiscal strategy well.

Gabriel Diaz Garcia
Alicante College of Economist nº3611