Question
Tax question for those who own rental properties in the US… We own a property in the US from which we earn rental income. When claiming that income for Spanish resident tax, will we be able to deduct our US city property taxes and expenses like gas/electricity/water, maintenance, etc.? Thanks for the insight!
Answers
These are the answers of Spainguru’s Facebook group members:
“If I remember rightly, the only deductions I was allowed were home insurance, management agency fees, and repairs. Not utilities. Note that you only pay tax at present on 50% of your overseas rental income IF it’s rented on a long-term basis.”
“My rental is in the U.K. so it’s a bit different. Tenants pay the council tax.”
“A friend who lives in Spain rents a house in USA using property management so it can be declared as passive income in the US.”
“Not in Spain. My understanding is deductions apply to Spanish property in Spain taxes and US property in US taxes.”
Conclusion
Community members shared mixed insights about what can be deducted when reporting rental income from U.S. properties as a Spanish tax resident.
While some reported being able to deduct certain expenses like repairs, insurance, or management fees, utilities and property taxes are generally not accepted as deductions in Spain. However, according to Spanish tax law, residents must declare all worldwide income, including income from foreign properties.
The good news is that Spanish tax residents can deduct necessary expenses directly related to generating rental income, such as maintenance, local taxes, and property management costs—this aligns with the official guidance for rental income taxation in Spain.
Additionally, Spain provides relief through the double taxation deduction system. If taxes have already been paid on the rental income in the U.S., it’s possible to deduct those taxes from the Spanish tax owed, preventing double taxation.
The 50% reduction mentioned in the group may refer to a temporary or contextual measure, but under normal circumstances, rental income is fully taxable in Spain after allowable deductions.
It’s essential to maintain clear documentation of both income and expenses and, when in doubt, consult a tax professional familiar with both systems.
