Profitability of Tourist Rentals in Marbella10 May 2017 | Renting FAQ
With the holiday-rental period about to start, at Benarroch Real Estate, we thought you, as an owner, would find it useful to be able to analyse the profitability of tourist rentals. That way, you’ll have all the information you need to help you decide what to do with the property that you bought as an investment in Marbella.
The dilemma between renting your property on short or long-term basis, or in other words, using the property for holiday or residential purposes, is brought into stark focus. At first, earning quick and easy money may be very appealing and to think that during the high season, you can collect an amount equal or higher than the profit you would obtain in a residential rental over a year is somewhat misleading from a profitability perspective.
In a holiday rental, the difference between income and deductible expenses does not benefit from reduction for tax purposes, so we are taxed for the result obtained. We must also bear in mind that for the period of time during which we do not rent the property out, we do need to allocate a proportional rent (1.1% of the cadastre value) as income.
On the contrary, if the rental is on a long-term basis, a 60% reduction is applied to the result obtained from the income and deductible expenses, so only 40% is taxed.
We must not forget the registry and compulsory requirements that properties used for holiday rentals must meet (you can see these in an earlier post on our blog) and the costs involved. The demands as regards requirements and services are greater in holiday rentals, and their maintenance requires a greater commitment and availability (cleaning, laundry, attention to each room).
At Benarroch, we offer sound, professional advice for you to make your decision. Do not forget that among our services we offer a Rentals and Peace of Mind Service, offering a selection of properties to your future tenant, debtor assurance, contract drafting, collection management and maintenance. Seek advice now. The decision is yours.
Article by Brice Benarroch Mennessons10 May 2017