Letting - Fresh capital wind for your property

Have you ever thought about renting out your property in Mallorca? The combination of capital appreciation and rising rental yields ensures double-digit profits in the coming years.

When it comes to finances and income, there are only a few things you can really rely on. Property has long been one of the most reliable forms of investment. Although dormant capital is a safe bank, it is better to generate money from the existing property. This works, for example, by renting and the associated tax advantages.

Desire for a vacation
Last summer showed it: It was hardly possible to book an apartment or vacation home not only in Mallorca, but throughout Spain. The new sense of freedom awakened people's desire to travel and their longing for vacations, sea and sun. This had a significant impact on the country's real estate market.

Prices at all-time high
Property prices have recovered significantly since 2020. On average, capital growth was 8.5 percent compared to the previous year. In certain regions, such as coastal areas and large cities, the market even recorded double-digit growth. The increase was not a flash in the pan: property prices have been rising for months and have now reached new highs.

This is also having an impact on rents: Yields have been increasing at double-digit rates every year. Anyone investing and renting in Spain, and especially in popular travel destinations such as Mallorca, can now expect net rental yields of almost five percent per year. The combination of capital growth and rising rental income can, in the best-case scenario, lead to a net yield of over ten percent per year.

Save on taxes
Renting out your own property as a non-resident also has tax advantages. These are subject to certain conditions: You must be liable for tax in the EU. The expenses you declare must not be related to the maintenance of the property in question. In addition, you must be able to submit invoices with VAT shown, which makes it easier to claim tax relief

Deductible costs
Non-residents in Mallorca can deduct the following expenses from their quarterly tax return:

• Interest from a mortgage loan (from the purchase of the property)
• Local administration fees, surcharges and taxes
• Expenses from the formalization of rental agreements
• House charges
• Premiums for household contents insurance
• Property repairs
• Utility bills (electricity, water, gas, internet, landline telephony)
• Cleaning
• Services (security, garden, etc.)
• Administration fees
• Invoices for marketing (e.g. on online portals)
• Expenses for marketing
• Depreciation and amortization