Béatrice Lemaire lives in Lyon and in 2019 inherited a 1970s flat in the La Laguna district of Cádiz. For years she used it in summer. In spring 2026 she decided to let it on longer seasonal lets and, first, renovated it: painting, repairs to the electrical installation, a new boiler replacing the old one, and a completely new kitchen and bathroom with partition walls moved. In total, 24,000 €. The first tenant moved in on 1 July paying 900 € a month. Her neighbour across the landing, Hamish Grant, who lives in Edinburgh, carried out very similar work in his identical flat. Both are turning over the same question: how much of those 24,000 € reduces the tax on the rent?
First, where you live matters
The general rule of the Non-Resident Income Tax (IRNR) is harsh: article 24.1 of its consolidated text (Royal Legislative Decree 5/2004) taxes the gross amount of the rent, with no expenses. Article 24.6 opens the door to residents of another European Union member state and to those of the European Economic Area with an effective exchange of tax information (Iceland, Norway and Liechtenstein): they may deduct the expenses provided for in the IRPF Law (Spanish personal income tax), as long as they prove that those expenses are "directly related" to the income obtained in Spain and have a direct economic link with it.
Béatrice lives in France and falls within the exception. Hamish lives in the United Kingdom, which is no longer a member state, and stays under the general rule: he pays 24 % on what he receives, whatever work he does. That difference is being challenged in the courts and we explain it in can I deduct expenses if I live outside the EU?. What follows is based on the legal text currently in force.
Repairing, replacing or improving
For someone who can deduct, the work is not treated as a single block. Article 13.a of the IRPF Regulations (Royal Decree 439/2007) distinguishes:
- Repair and maintenance: work done "for the purpose of maintaining the normal use" of the property, such as painting or fixing installations, and the replacement of items such as the heating, the lift or security doors. It is deducted in the year, subject to a cap.
- Extension or improvement: the same article says it is not deductible as a repair. It is added to the value of the property and recovered gradually through depreciation.
Applied to Béatrice's work, with example figures:
| Item | Amount | Nature | Treatment for Béatrice |
|---|---|---|---|
| Full repaint | 2,300 € | Maintenance | Expense of the year, with a cap |
| Repairs to the electrical installation | 1,700 € | Repair | Expense of the year, with a cap |
| New boiler in place of the old one | 2,500 € | Replacement of an item | Expense of the year, with a cap |
| New kitchen and bathroom, with partition walls | 17,500 € | Improvement | Depreciation at 3 % a year |
| Total | 24,000 € |
The dividing line is not always sharp. Changing a broken boiler for an equivalent one is replacement; installing an air-source heat pump where there was no heating is closer to an improvement. Reconfiguring the bathroom and changing the whole kitchen is almost always an improvement. If you are unsure, the guide on improvement or repair develops the criteria with examples.
The cap that holds back repairs
Repair and maintenance expenses, together with financing interest, may not exceed, for each property, the gross income obtained. The excess can be deducted in the following four years, under article 23.1.a of the IRPF Law and the same article 13 of the Regulations.
In Béatrice's case, 2026 has only six months of letting:
- Gross income for 2026: 900 € × 6 = 5,400 €.
- Repair and maintenance: 2,300 + 1,700 + 2,500 = 6,500 €.
- Deductible in 2026 on that account: 5,400 €, the cap.
- Excess carried forward: 6,500 − 5,400 = 1,100 €.
- Depreciation of the improvement: 17,500 × 3 % = 525 € a year; for the six months let, 262.50 €.
On top of that come the depreciation of the rest of the flat, the IBI (the annual local property tax) and the service charge of the comunidad de propietarios (the owners' association) in proportion to the days let, which the guide on days let and apportionment explains. The result is a 2026 Modelo 210 with zero tax.
Article 15.1 of the IRNR Law says that a non-resident without a permanent establishment is taxed "separately for each accrual" and without offsetting between items of income. The IRPF rule that allows the excess to be carried forward for four years is designed for a resident's annual return. Applying it in the 210 returns for 2027 and later years is defensible, but not free from dispute, and the same goes for any part of the tax base that ends up negative. It is advisable to document it and to accept that the tax authorities may not share that view.
Expenses before the first tenant
Béatrice's work was paid for in April and May, before any letting existed. Article 24.6 requires a direct link with the income obtained in Spain, and that link is easier to prove the closer the work and the contract are to each other. It helps to have the flat advertised while the work is going on, a quotation that mentions the intended use, and a contract signed shortly afterwards. If the flat stands empty for months or goes back to being used in summer, the argument weakens.
While the flat is not let and remains available to its owner, imputed income may also arise. Article 85 of the IRPF Law excludes from imputation properties under construction and those that cannot be used for planning reasons, but an interior renovation of a finished flat does not fit easily into either of those two cases. For 2026, Béatrice will have to consider an imputation 210 for the first half of the year, calculated at 1.1 % or 2 % of the valor catastral (the official cadastral value) depending on the municipality, for the days before the letting. This is explained in the question on imputed income from property.
If you are planning work and want to know how to split it before paying invoices, you can send us quotations and dates through the non-resident form.
Hamish: the work does not lower the tax on the rent, but it does on the sale
For Hamish, the 2026 sum is simple and not very pleasant: 5,400 € × 24 % = 1,296 €, with nothing deducted. The same 24,000 € of work does not reduce his tax on the rent.
Not everything is lost. When he sells, the gain will be calculated under the IRPF rules by virtue of the cross-reference in article 24.4 of the IRNR Law, and article 35.1.b of the IRPF Law adds to the acquisition value "the cost of investments and improvements". The 17,500 € of kitchen and bathroom will increase his acquisition value and reduce the gain, which is taxed at 19 % for any non-resident. Repairs, by contrast, are not added, because they are neither an investment nor an improvement.
| Béatrice (France) | Hamish (United Kingdom) | |
|---|---|---|
| Rate on the rent | 19 % | 24 % |
| Repairs (6,500 €) | Deductible with a cap | Not deductible |
| Improvement (17,500 €) | Depreciated at 3 % | Not depreciated in the 210 |
| Effect on a future sale | Increases the acquisition value | Increases the acquisition value |
| Tax on the 2026 rent | Zero tax in the example | 1,296 € |
The same article 35.1 requires depreciation to be subtracted from the acquisition value. If Béatrice depreciates the improvement in her 210 returns, that depreciation will later reduce the cost figure used on the sale. How that rule applies to someone who could not deduct anything, like Hamish, is a question worth studying before selling; the guide on minimum depreciation on a sale sets out the problem. There is no answer we can guarantee.
Invoices that will stand up to a review
None of the above is any use without proof. Invoices must be in the name of the person shown as owner, with the NIE (the foreigner's tax identification number) and the address of the property, itemising each part of the work so that repair can be separated from improvement. A single quotation for a "full renovation" forces you to defend the split later, when it is harder. Payment by bank transfer from an account in the owner's name completes the picture. If the flat has two owners, each deducts in proportion to their share, and it is advisable for the invoices to reflect that.
How your country of residence treats the work and the tax paid in Spain is not something we give opinions on: your adviser there confirms it. For the rest of the process, the guide to the Modelo 210 for rental income sets out deadlines and key points, and the one on calculating the gain on a sale shows how the work reappears on the day you sell.
Separating repairs, improvements and days of own use in each 210 is part of the work we do for owners who live abroad; the details are on the Salama Tax page.