Rental Tax Deductions in Spain for Non-Resident Landlords: What Expenses You Can Claim Against IRNR (2026)

A non-resident landlord who lets a Spanish property can offset some of the running costs against the tax bill, but only if they live in the EU or an EEA state with effective tax information exchange. Article 24.6 of the LIRNR (Real Decreto Legislativo 5/2004) opens the deduction regime of the Spanish personal income tax law to EU and EEA natural persons, while Article 24.1 taxes everyone else on gross income. A 2025 court ruling has challenged that split. This page sets out every deductible expense category, the amortization calculation, the residential rental reduction, and the Audiencia Nacional ruling that may change the non-EU position.

What is the legal basis for non-resident rental deductions?

The deduction right comes from two statutes working together. Article 24.6 of the LIRNR (Real Decreto Legislativo 5/2004) states that natural persons resident in another EU member state may deduct the expenses provided for in the IRPF law (Ley 35/2006), provided the taxpayer certifies that the expenses are directly related to the income obtained in Spain and have a direct and inseparable economic link with the activity performed in Spain. The same provision extends to residents of EEA states with effective tax information exchange, which in practice means Iceland, Norway and Liechtenstein.

Article 23 of Ley 35/2006 (the IRPF law) then supplies the actual expense categories. This is the same list that Spanish resident landlords use on their annual IRPF return. The Agencia Tributaria confirms this on its English-language IRNR guidance page: EU and Iceland/Norway individuals “may deduct the expenses provided for in the Personal Income Tax Act for the determination of the gross tax base,” provided the expenses are directly related to the Spanish income.

For non-EU residents, Article 24.1 of the LIRNR sets the general rule: the taxable base is the full amount of income (importe integro) with no deductions. A UK landlord post-Brexit, a US owner or a Swiss resident therefore pays 24% on every euro of rent received, with no offset for mortgage interest, community fees or insurance. The Audiencia Nacional ruling discussed below may change this, but the statute as written remains in force.

The filing mechanics, including the annual grouping rules and the personal-filing requirement, are covered in detail in the Modelo 210 rental income guide. This page focuses on what you can deduct, how to calculate each category, and how the residential rental reduction works.

What expenses can EU and EEA landlords deduct?

Article 23.1 of the IRPF law (Ley 35/2006) lists the deductible expense categories. Applied through Article 24.6 of the LIRNR, these are the expenses an EU or EEA natural person may claim against Spanish rental income:

Expense category	Deductible?	Statutory basis (Art. 23.1 IRPF)	Notes
Mortgage interest and financing costs	Yes	23.1.a.1	Capped at rental income received; excess carried forward 4 years
Repairs and conservation	Yes	23.1.a.1	Must maintain, not improve, the property
Non-state taxes and tolls (IBI, basura, community fees)	Yes	23.1.a.2	Must relate to the property or the rental income
Third-party service fees (letting agent, management, cleaning)	Yes	23.1.a.4	Must be for services rendered in connection with the rental
Doubtful debts (unpaid rent)	Yes	23.1.a.3	Conditions set in the IRPF Reglamento
Property amortization (depreciation)	Yes	23.1.b	3% of acquisition cost or valor catastral, excluding land
Utilities paid by the landlord	Yes	23.1.a.1 (as necessary expenses)	Only the portion related to the rental period
Insurance (building, liability, contents)	Yes	23.1.a.1 (as necessary expenses)	Must cover the rented property
Furnishing and equipment depreciation	Yes	23.1.b	Depreciation per the IRPF Reglamento tables
Personal use costs	No	n/a	Costs while the owner occupies the property
Capital improvements (extensions, new rooms)	No (capitalised)	23.1.a.1	Added to acquisition cost, recovered via amortization

The first category, mortgage interest and financing costs, is often the largest single deduction. Article 23.1.a.1 of the IRPF law allows deduction of “interest on borrowed capital invested in the acquisition or improvement of the property” plus other financing costs. The total deduction for interest and repairs combined is capped at the rental income received in that year. Any excess is carried forward and may be deducted in the following four years. This means a landlord whose mortgage interest exceeds their rental income in a given year cannot create a rental loss, but can use the unused interest against future rental income.

The second category, repairs and conservation, covers work that maintains the property in its existing condition. Replacing a broken boiler, repainting, fixing a leaking roof or repairing air conditioning all qualify. Structural improvements that add value or floor area, such as building an extension or installing a swimming pool, do not qualify as repairs; they are capitalised into the acquisition cost and recovered through amortization.

Non-state taxes and tolls under Article 23.1.a.2 include the IBI (Impuesto sobre Bienes Inmuebles), the basura (refuse collection) charge, and community fees (cuota de comunidad). State taxes, including the IRNR itself, are not deductible. Sanctions and fines are explicitly excluded. Our IBI property tax guide covers the IBI rate bands and municipal variation across Costa del Sol towns.

Third-party service fees under Article 23.1.a.4 cover amounts paid to letting agents, property managers, cleaners and other service providers. The fees must be for services rendered in connection with the rental activity. A letting agent’s commission on rent collected, a management company’s monthly fee for overseeing the property, and a cleaning service between tenancies all qualify.

How is property amortization calculated?

Article 23.1.b of the IRPF law allows deduction of amounts set aside for the amortization of the property and other assets ceded with it, provided the amortization reflects actual depreciation. For buildings, the law deems amortization to be effective if it does not exceed 3% of the greater of the acquisition cost or the valor catastral, excluding the value of the land. The Agencia Tributaria’s IRPF manual cites Article 23.1.b of the Ley IRPF and Article 14 of the Reglamento IRPF as the legal basis for this calculation.

The land exclusion is critical. The 3% applies only to the building portion of the property value, because land does not depreciate in the same way. For a property purchased for EUR 300,000 where the land value is EUR 60,000 (20% of the purchase price, a common ratio on the Costa del Sol), the deductible annual amortization is:

Component	Value
Purchase price	EUR 300,000
Land value (excluded)	EUR 60,000
Building value (subject to 3%)	EUR 240,000
Annual amortization deduction	EUR 7,200

If the valor catastral is higher than the purchase price (rare but possible after a Catastro revision), the 3% applies to the valor catastral minus its land component. The valor catastral is broken down into construction and land values on the IBI receipt, so both figures are readily available. Our catastral value guide explains where to find these numbers.

Furniture and equipment supplied with the rental are amortized separately at the rates in the IRPF Reglamento tables. A sofa, bed or washing machine given over to the tenant depreciates on a declining balance, typically at rates of 10-20% per year depending on the asset class. The amortization of fittings and furniture is also capped at the rental income received.

What is the residential rental reduction?

Article 23.2 of the IRPF law applies a reduction to the net positive rental yield for residential tenancies. After deducting all eligible expenses and arriving at the net yield, the landlord applies a percentage reduction to arrive at the taxable base. The reduction rates, effective for contracts signed from 1 January 2024 under Ley 12/2023, are:

Reduction rate	Condition	Statutory basis
50%	General residential rental	Art. 23.2.d
60%	Property rehabilitated within 2 years before the lease	Art. 23.2.c
70%	Social housing in a tensioned zone, or tenant under 35 in a tensioned zone (first rental)	Art. 23.2.b
90%	New contract in a tensioned zone with rent reduced more than 5% vs the prior contract	Art. 23.2.a

A tensioned zone (zona de mercado residencial tensionado) is an area designated by the Ministry of Transport under the housing law where rent growth has outpaced local income growth. Designations are published in ministerial resolutions. Most of central Madrid and Barcelona fall within designated tensioned zones; Costa del Sol municipalities have not been designated as of mid-2026.

For a standard residential rental outside a tensioned zone, the 50% reduction applies. A landlord with EUR 18,000 gross rent and EUR 6,000 in deductible expenses has a net yield of EUR 12,000. The 50% reduction cuts the taxable base to EUR 6,000. At the 19% EU rate, the tax due is EUR 1,140 instead of EUR 2,280 without the reduction.

The reduction applies only to positive net yields. If expenses exceed income, there is no reduction to apply, and the unused interest and expenses carry forward as described above. The reduction also does not apply to non-residential rentals (commercial, tourist-apartment or seasonal lets where the tenant uses the property for a non-residential purpose). The distinction between residential and tourist rental matters here: a property let as a short-term tourist apartment through a platform may not qualify for the residential reduction if the use falls outside the LAU’s residential scope. Our renting out property guide covers the residential versus tourist rental classification in detail.

How do you calculate net rental income with deductions?

The calculation follows a three-step process. First, sum all gross rental income for the year. Second, deduct all eligible expenses under Article 23.1 of the IRPF law, respecting the interest-and-repairs cap and the amortization cap. Third, apply the residential rental reduction (if applicable) to the positive net yield.

A worked example for a German landlord with a Marbella apartment rented residentially year-round:

Step	Item	Amount
1	Gross annual rent	EUR 18,000
2a	Mortgage interest	EUR 3,600
2b	IBI and community fees	EUR 1,200
2c	Insurance and management fees	EUR 900
2d	Amortization (3% of EUR 240,000 building value)	EUR 7,200
2e	Total deductible expenses	EUR 12,900
3	Net yield (EUR 18,000 minus EUR 12,900)	EUR 5,100
4	Residential reduction (50% of EUR 5,100)	EUR 2,550
5	Taxable base	EUR 2,550
6	IRNR tax at 19%	EUR 484.50

Without the deduction regime (as a non-EU landlord would face under the current statute), the same property would generate EUR 18,000 taxable at 24%, or EUR 4,320. The deduction regime and the residential reduction together cut the tax bill by nearly 90% for this EU landlord. This is why the non-EU deduction question, addressed by the Audiencia Nacional ruling, matters so much to UK and other third-country owners.

If the property is used personally for part of the year and rented for the rest, expenses must be apportioned. Mortgage interest, IBI, community fees, insurance and amortization are split pro rata based on the days the property was available for rent versus used personally. Only the rental proportion is deductible against rental income on Modelo 210. The personal-use portion is not deductible.

What does the Audiencia Nacional ruling mean for non-EU landlords?

The Sentencia 636/2021 of the Audiencia Nacional, issued on 28 July 2025 (ECLI:ES:AN:2025:3630), held that the Spanish domestic legislation denying expense deductions to non-EU and non-EEA residents infringes Article 63 of the Treaty on the Functioning of the European Union, which guarantees the free movement of capital. The court concluded that all non-resident taxpayers have the right to deduct expenses when determining the yield of their rented properties, not only those resident in the EU or EEA.

The case was brought by a non-EU landlord who had been taxed on gross rental income under Article 24.1 of the LIRNR. The court’s reasoning was that the distinction between EU/EEA and non-EU residents, for the purpose of rental expense deductions, constitutes discrimination that restricts the free movement of capital. A third-country investor deciding whether to buy Spanish rental property faces a higher effective tax rate than an EU investor on the same property, which the court found to be an unjustified restriction.

The ruling is not yet settled law. The Spanish tax administration and the State Attorney opposed the taxpayer’s position during the proceedings, and the case may be appealed to the Tribunal Supremo (Supreme Court), which could refer the question to the Court of Justice of the European Union. There is also an argument around the standstill clause in Article 64.1 TFEU, which permits maintaining restrictions on capital movements with third countries that existed before 31 December 1993. The restriction on deductions for non-residents already existed in Ley 18/1991 (the predecessor IRPF law), which contemplated the prohibition of deductions for non-residents before the TFEU standstill date, so the standstill clause may support the Spanish position.

Practical implication: a non-EU landlord who wishes to claim expense deductions can file Modelo 210 on that basis, citing the Audiencia Nacional ruling. If the Agencia Tributaria challenges the return, the landlord can point to the court’s reasoning. Refund claims for non-prescribed years (generally the four years preceding the filing) may also be available where tax was previously paid on gross income. This should be done with a Spanish tax advisor, not unilaterally, because the statute has not been amended and the ruling may be overturned on appeal. Our IRNR framework guide covers the broader non-resident tax regime, and the Modelo 210 filing guide has the filing mechanics and the post-Brexit UK position.

What records do you need to support the deductions?

The LIRNR requires EU and EEA landlords to certify that expenses are directly related to the Spanish rental income and have a direct and inseparable economic link with the activity. In practice, the supporting documentation includes:

• A certificate of tax residence (certificado de residencia fiscal) issued by the landlord’s home country tax authority, valid for the tax year being filed. Without it, the Agencia Tributaria will not allow the deductions.
• Invoices and receipts for every deductible expense, showing the date, amount, supplier and the property address.
• The mortgage loan statement showing the interest portion of each payment (capital and interest are reported separately on Spanish mortgage statements).
• The IBI receipt and community fee receipts for the tax year.
• The property deed (escritura) showing the acquisition price, and the valor catastral certificate showing the construction and land value split.
• Letting agent or management contracts and the fee invoices issued by the agent.

The records should be retained for the statute of limitations period, which is four years from the end of the voluntary filing period under the Ley General Tributaria (Ley 58/2003). A non-EU landlord filing under the Audiencia Nacional reasoning should retain the same records, plus a copy of the ruling citation, to support the deduction claim if the return is reviewed.

How do deductions interact with the other non-resident property taxes?

Rental expense deductions apply only to actual rental income. They do not affect the imputed income tax on a vacant property (renta imputada de bienes inmuebles), which is calculated as 1.1% or 2% of the valor catastral with no expense deductions. They do not affect capital gains tax on a property sale, which is taxed at 19% on the gain with a 3% buyer retention. A landlord who rents for part of the year and leaves the property vacant for the rest files two separate Modelo 210 returns: one for the rental income (with deductions and the residential reduction) and one for the imputed income on the vacant period (no deductions). The annual property taxes guide covers the imputed income calculation, and the non-resident CGT guide covers the sale process.

The deduction regime is a significant tax advantage for EU and EEA landlords, and the Audiencia Nacional ruling may extend it to non-EU landlords in time. The expense categories, the amortization calculation and the residential reduction together determine what a non-resident landlord actually pays, which is often far less than the headline rate suggests for those who qualify.

This guide is general information, not legal or tax advice. Rules change and individual circumstances differ. Verify current requirements with an independent lawyer (abogado) or tax advisor (gestor/asesor fiscal) before acting.