Spanish rental properties face tourism tax clampdown

Property owners in Spain who let to tourists and aren't registered with their local tourism authority face fines of up to €30,000 under a new clampdown.

The Spanish authorities are looking at websites and checking paperwork in an attempt to stamp out what they regard as unregistered letting. Neighbours are even reporting people to the authorities.

It is understood that many of property owners in Spain don't register because the conditions and terms are stringent. With recent interest rate rises and the slowing down of the housing market, more and more are turning to the tourism market to offset their losses.

But the law clearly states that if your property is let to tourists, you are probably in breach of the law. Legally, these apartments and villas should be registered for holiday rentals.

In addition to fines for illegal holiday letting, owners of these properties could face the wrath of both the Spanish tax authorities and, if they are expatriates, those in their home country, if rental earnings are not declared.

'Given the fact that buy-to-let mortgages are more readily available nowadays, many expatriates have been seduced into investing in property in Spain with rental income from holidaymakers paying their mortgage and providing them with an additional income,' said Gary Davidson, a consultant based in Ibiza. An average two-bedroom apartment with a sea view can net as much as €1,400 per week in the height of the summer season.

Those with property in the Balearic Islands and on the Andalucía coast have been reported to the authorities by their Spanish neighbours for letting out their premises, according to Mr Davidson. Most say they bought their second homes for investment purposes and that, after advertising them on the internet for holiday rental, were booked solid for most of the year.

Many property owners have no idea the premises require licensing from the tourist authorities to be used as holiday rentals until they are hit with legal action.