Owning a rental property in Andalucía’s Costa del Sol, whether in bustling Manilva or charming Casares, is a dream investment. But should you opt for the steady income of long-term rentals or the potentially lucrative holiday lets? It’s not just about the rent—taxes, costs, and effort play a huge role. Spain’s 2023 Housing Law offers generous tax breaks for long-term rentals, while holiday lets face extra expenses like laundry and stricter regulations. In this blog, we’ll compare the tax benefits and net income for a landlord renting a Manilva property long-term at €1,000/month (with tenants covering utilities) versus holiday lets at €1,000/week, assuming 35% occupancy (covering peak months: June, July, August, and September). Meet Javier, a Spanish tax resident, weighing his options, and let’s crunch the numbers to guide your 2025 rental strategy in Andalucía.
Long-Term vs. Holiday Lets: What’s the Deal?
Andalucía’s rental market thrives with demand from locals, expats, and tourists flocking to Málaga’s coastal hotspots. Long-term rentals provide stability and tax perks, especially in stressed housing areas like Manilva, where rents exceed 30% of household income. Holiday lets tempt with higher weekly rates but come with costs like laundry, utilities, and compliance with Andalucía’s Decree 28⁄2016. Let’s see how these stack up for Javier’s Manilva apartment.
Tax Benefits for Long-Term Rentals
The 2023 Housing Law (Ley 12⁄2023) incentivizes long-term rentals (tenant’s primary residence) with personal income tax (IRPF) reductions in stressed areas like Manilva. As a Spanish tax resident (>183 days/year in Spain), Javier can claim:
- 90% Tax Reduction: If rent is reduced by 5% from the previous contract.
- 70% Tax Reduction: For tenants aged 18–35, vulnerable tenants (e.g., unemployed), or public entities.
- 60% Tax Reduction: For recently renovated properties or student rentals during the academic year.
- 50% Tax Reduction: For any long-term rental in a stressed area, no extra conditions.
These apply to net rental income (gross rent minus expenses like IBI, community fees, or maintenance). Long-term tenants cover utilities (electricity, water), lowering Javier’s costs.
Tax and Costs for Holiday Lets
Holiday lets (short-term rentals months, e.g., via Airbnb) are taxed under IRPF for tax residents like Javier, but without the 50–90% reductions, as these are exclusive to long-term rentals. Deductible expenses include laundry, cleaning, and utilities, but a 10% VAT (IVA) applies to services (e.g., laundry, management fees). Holiday lets require a tourist license, occupancy certificate, and amenities (e.g., cooling/heating) under Decree 28⁄2016. Javier covers utilities, unlike long-term rentals.
Non-residents face different rules: UK landlords pay 24% IRNR on gross income (no deductions), EU non-residents pay 19% IRNR on net income, both without access to the Housing Law’s reductions.
Cost Comparison: Long-Term vs. Holiday Lets
Let’s calculate Javier’s Manilva apartment, rented long-term at €1,000/month (€12,000/year) or as a holiday let at €1,000/week with 35% occupancy (18.2 weeks/year, covering June–September, peak season). We assume Javier is a Spanish tax resident and include laundry costs (€50/week) for holiday lets. Long-term tenants pay utilities; Javier covers them for holiday lets.
Scenario 1: Long-Term Rental (€1,000/month)
Javier rents to a young couple (aged 25) in Manilva, a stressed area, reducing rent by 5% from the previous contract for the 90% IRPF reduction. Tenants cover electricity and water.
- Gross Rental Income: €1,000 × 12 = €12,000/year.
- Expenses:
- IBI (property tax): €1,200/year.
- Community fees: €1,500/year.
- Maintenance/repairs: €800/year.
- Total Expenses: €3,500/year (utilities paid by tenant).
- Net Rental Income: €12,000 – €3,500 = €8,500.
- 90% Reduction (Manilva, 5% rent reduction): €8,500 × 90% = €7,650 reduction.
- Taxable Income: €8,500 – €7,650 = €850.
- IRPF Tax (19% for income up to €12,450, assuming no other income): €850 × 19% = €162/year.
- Net Income After Tax: €12,000 – €3,500 – €162 = €8,338/year.
- Additional Costs: None (no laundry; minimal management).
Scenario 2: Holiday Let (€1,000/week, 35% occupancy)
Javier lists his apartment on Airbnb at €1,000/week, achieving 35% occupancy (18.2 weeks/year, June–September). He covers utilities, laundry (€50/week), and complies with tourist rental regulations.
- Gross Rental Income: €1,000 × 18.2 weeks = €18,200/year.
- Expenses:
- IBI: €1,200/year.
- Community fees: €1,500/year.
- Maintenance/repairs: €800/year (slightly higher due to guest turnover).
- Utilities (electricity, water): €1,500/year (estimated for 18.2 weeks).
- Laundry: €50 × 18.2 weeks = €910/year.
- Cleaning fees (between guests): €50 × 18.2 = €910/year.
- Management fees (20% of income): €18,200 × 20% = €3,640/year.
- Total Expenses: €1,200 + €1,500 + €800 + €1,500 + €910 + €910 + €3,640 = €10,460/year.
- Net Rental Income: €18,200 – €10,460 = €7,740.
- IRPF Tax (19% up to €12,450, assuming no other income): €7,740 × 19% = €1,471/year.
- VAT (10% on services): Applies to laundry, cleaning, and management (€910 + €910 + €3,640 = €5,460 × 10% = €546/year).
- Total Tax (IRPF + VAT): €1,471 + €546 = €2,017/year.
- Net Income After Tax: €18,200 – €10,460 – €2,017 = €5,723/year.
- Additional Costs: Time managing bookings, guest turnover, and compliance with Decree 28⁄2016.
Javier files IRPF (Form 100) and quarterly VAT (Form 303). The higher revenue is offset by taxes, expenses, and effort, making holiday lets less appealing.
Comparison
- Long-Term Rental:
- Gross Income: €12,000/year.
- Net Income After Tax: €8,338/year.
- Pros: Stable income, 90% tax reduction, tenants cover utilities, low management.
- Cons: Lower revenue, less property access.
- Holiday Let:
- Gross Income: €18,200/year.
- Net Income After Tax: €5,723/year.
- Pros: Higher weekly rates, property access off-season.
- Cons: Higher taxes (no reductions, VAT), high expenses (€10,460), regulatory burden, and management effort.
Surprisingly, long-term rentals net €2,615 more than holiday lets at 35% occupancy, thanks to tax breaks and lower costs.
Why This Matters in Andalucía
Manilva’s housing shortage, driven by tourist lets, makes long-term rentals vital, with the 2023 Housing Law’s tax breaks (50–90% IRPF reductions) boosting their appeal. Holiday lets face strict rules under Decree 28⁄2016 (licenses, registration), and low occupancy (35%) during peak months reduces profitability. Long-term rentals offer Javier simplicity and savings, while holiday lets demand more work for less return at this occupancy.
Non-Resident Considerations
For UK non-residents, long-term rentals yield €12,000 × 24% IRNR = €9,120 after tax; holiday lets yield €18,200 × 24% = €13,832. EU non-residents pay 19% IRNR on net income but miss the 50–90% reductions. Spanish tax residency maximizes long-term rental profits.
Tips to Maximize Returns
- Verify Stressed Areas: Confirm if your property (e.g., Manilva, Casares) is stressed for long-term tax benefits. Check with your ayuntamiento.
- Assess Residency: Non-residents (e.g., UK) might consider Spanish tax residency for IRPF reductions, but consult a tax advisor.
- Document Expenses: Track costs (IBI, laundry, cleaning) to reduce taxable income, especially for holiday lets.
- Ensure Compliance: Long-term contracts need tenant NIE and primary residence proof. Holiday lets require a tourist license and Decree 28⁄2016 compliance.
- Get Advice: Consult a Manilva advisor (e.g., Domenico di Giorgio) for IRPF (Form 100), IRNR (Form 210), or VAT (Form 303) filings.
Javier’s Story
Javier sips wine in Manilva, torn between options. Long-term renting offers €8,338 net with minimal effort, letting him support a local couple and enjoy his evenings. Holiday lets promise more but deliver only €5,723 at 35% occupancy, with endless guest emails and laundry. He chooses long-term for peace and profit, aligning with Manilva’s housing needs.
Final Thoughts
In 2025, long-term rentals in Andalucía’s Manilva net €8,338/year at €1,000/month, outshining holiday lets’ €5,723 at €1,000/week (35% occupancy) due to 90% IRPF reductions and lower costs. Long-term offers stability; holiday lets require effort for less reward. Consult Limit Consulting to pick your path.