When renting a property, it is important to understand the different types of leases available and the advantages and disadvantages of each.


In this article we will focus on long term leases and seasonal leases.


Our current Ley de Arrendamientos Urbanos (Urban Rental Law) regulates the rental contract for housing in its article 2 and the rest of the rentals in its article 3.


“Article 2. Rental of a dwelling.

  1. The lease of a dwelling is considered to be the lease of a habitable building whose main purpose is to satisfy the permanent housing needs of the lessee.
  2. The rules governing the letting of a dwelling shall also apply to furniture, storage rooms, parking spaces and any other rooms, rented spaces or services provided by the lessor himself as an accessory to the property.”


“Article 3. Letting for use other than as a dwelling

  1. A tenancy for a use other than that of a dwelling shall be deemed to be a tenancy which, in respect of a building, has as its principal purpose a use other than that specified in the preceding article.
  2. This consideration applies, in particular, to leases of urban property concluded on a seasonal basis, whether in the summer or otherwise, and to those concluded for the purpose of exercising an industrial, commercial, craft, professional, recreational, welfare, cultural or educational activity on the property, whoever the persons concluding the lease may be.”


These two types of lease are also characterised:


1.- In the case of a residential tenancy, the tenant may occupy the property for up to five years if the landlord is a natural person, or seven years if the landlord is a legal person, even if a shorter period is stipulated in the contract (art. 9 Ley de Arrendamientos Urbanos).


On the other hand, in the case of a seasonal tenancy, the contract will be terminated at the end of the period established by the parties in the contract.


2.- In the case of a residential rental, the tenant can cancel the contract after 6 months, whereas in the case of a seasonal rental, the agreement between the parties (whatever it may be) must be respected, and in the case of a seasonal rental, if the contract does not include a cancellation period, the possibility of cancellation does not exist and the contract is binding for the entire period established in the contract.


3.- Regarding the use of the property:


In the case of long-term rental contracts: the property must be used to satisfy the tenant’s permanent housing needs.


On the other hand, in the case of seasonal tenancies, as our Supreme Court has established in several judgments, the seasonal tenancy must be linked to and justified by a commercial, professional, craft, cultural or leisure use of the property, and in no case may it be used as a permanent residence.

This last point calls into question the possibility of declaring this type of (temporary) rental as the use of the habitual residence for income tax purposes. As the Supreme Court states


“The circumvention of the minimum duration or the obligatory renewal for the lessor, in rental contracts subject to special law, by means of the simulated creation of a seasonal rental contract, is old and has long been examined by case law, which is why the STS of 5 June 1963 pointed out that the literal interpretation of the contract cannot prevent its fair and logical interpretation, which cannot deprive the weaker party, which is the target of the legal protection.

In the contested tenancy agreement for an apartment, it was stated in general terms that the apartment was seasonal, without specifying or justifying in the proceedings what seasonal, circumstantial occupation, with no vocation of permanence in time, was intended to be satisfied, the landlord was unable to state the reason for this seasonal nature, which, according to the documentary evidence (which merely corroborates the testimony of the witnesses, despite their interest in the matter in dispute), appears to be imposed in other contracts in the same building where the plaintiff is the landlord, although there is no reason for it.”


“Therefore, as in the situation examined by the STS of 26 March 1997, the assessment of a tenancy, which is undoubtedly similar to the case at hand, without specifying what kind of “season” it is, which is so long that, as in the case at hand, it was 11 months, using the term “seasonal tenancy”, in that contract and in others involving the same lessor, despite the fact that there is no minimum specificity for residential leases to exclude them from the scope of application of Article 2 of the LAU, there is no evidence in the file that the tenant must occupy the property for an entire period or during which she does anything, only an agreed “season” of eleven months is recognised, which within a year is no more unique in the lease than the non-use of the property for one month”.



In order to understand these tax differences, it is necessary to clarify some concepts:




In order to obtain the income from real estate capital, the deductible expenses are deducted from the total income and, where applicable, certain reductions are applied to this amount.

The following are considered to be full property income


– Those deriving from the lease or from the creation or transfer of rights or powers of use or enjoyment over rustic and urban real estate, or over rights in rem pertaining thereto, the ownership of which corresponds to the taxpayer and which are not related to economic activities carried out by the taxpayer.

– The amounts received for the remaining assets, such as furniture and fixtures.

In the case of subletting:

– The amounts received by the sub-lessee are not considered as income from real estate capital, but as income from movable capital.

– If the landlord’s share of the sublet price is considered as income from real estate capital, no reduction may be applied to the net yield.




This reduction applies only to the rental of a property used as a main residence, which satisfies a permanent housing need, and is calculated as follows:


The total gross income minus the necessary expenses that are considered deductible will give us the declared positive net yield, which will be reduced by 60%, regardless of the age of the tenant.

With regard to these two categories of rental contracts, long-term and seasonal, for income tax purposes (IRPF)


For seasonal contracts:


The income obtained from the rental of the property must be declared as income from real estate capital, but, as in the case of permanent residence, seasonal rental cannot lead to a reduction of 60% of the positive net income, according to the resolution of the Central Economic Administrative Court (TEAC) of 8 March 2018, R.G. 5663/2017.


In the case of seasonal rental, two different periods of the year must be declared:


  1. The period in which the property is rented: the necessary expenses (IBI, mortgage, loan interest, insurance, community expenses, amortisation and service/supply expenses not passed on to the tenant) can only be deducted in proportion to the number of days rented.


  1. The period during which the property is not rented: The tax authorities will deduct a rent for the ownership of a property that is not used as a principal residence, calculated as 1.1% of the cadastral value of the property, in proportion to the period indicated (days during which it is not rented and is effectively “at the disposal of the owner”). For example, if the property has a cadastral value of €60,000 and is rented to a student for 90 days, 1.1% of 60,000 x 90 days = 660 x 90= 59400 will be calculated and this will be divided into 365 days, resulting in the imputed rent of €162.73 for this period of non-letting of the property.


In the case of long-term leases


The personal income tax (IRPF) states:


The sums received by the owners or usufructuaries of a property for renting it out are, in general, income from real estate capital.

However, if the rental is carried out as a business activity, the income derived from it is income from economic activities if at least one person with a full-time employment contract is used to carry out the activity.




Although it is true that the protection of tenants in habitual residence rental contracts implies less flexible conditions of the contract, depending on the income received from the rental, it is fiscally much more advantageous than the seasonal rental contract.


Therefore, the advantages and consequences of each contract should be weighed according to the income received and the expenses that could be deducted from the rental.



If you have any questions regarding long-term or seasonal leases, please contact us.