More and more residents of the Valencian Community have become central to a growing income source. While it’s easy to imagine big investment funds driving price jumps, the reality is often closer to home: individuals are increasingly the stewards and beneficiaries of the boom in tourist apartments.
According to the latest figures from the Tax Office, 311,684 residents in the autonomous region declared income from this activity in 2021. That year marked a 5% rise from the previous period, and it was 28% higher than five years earlier, equivalent to about 68,000 more declarations.
The monetary impact is even more striking. Income from this activity grew from 1.657 million euros in 2016 — reflecting only personal income tax receipts — to 2.273 million in 2021. That jump of 37% mirrors not only a larger inventory of rental properties but also higher rental prices.
In this context, it should be noted that within the last year alone, the total figure rose by 10% and still does not account for the dramatic rent increases seen in 2022 and 2023.
more control
The chair of the Financial Committee at the Alicante College of Economists, Antonio PerezRovira, links the rise in declared rents to several factors. The most notable is intensified fraud enforcement by the Tax Office, which now employs more sophisticated methods to identify properties that register activity while owners claim vacancy. From electricity usage to data sharing among taxpayers, there are multiple gaps that the treasury does not fully monitor.
Buying or renting a house? This is the Alicante picture
Nevertheless, PerezRovira notes a growing trend of people turning savings into property investments, both through long-term rentals and short-term tourist listings, including properties they own but only use for part of the year as demand grows.
He mentions clients who rent out a parent’s or relative’s home during the busy season to capitalize on profitability. In municipalities such as Xàbia, even if locations are not ideal, parcels of land or villas can yield substantial returns during the summer, sometimes ranging between 18,000 and 20,000 euros via online platforms.
In every scenario, the typical rent reported by taxpayers remains meaningful but modest: last year hovered around 7,295 euros. Approximately two-thirds of rents declared to the treasury come from habitual residential dwellings rather than tourist-aligned properties, a path that has historically offered tax advantages. However, the old advantage has shifted under new policies and market realities.
With the Housing Act now shaping the tax landscape, the effective rate on rental income for traditional landlords has dropped overall to about 50%, though it can rise to 90% for landlords who cap rents in areas facing affordability pressure.
facilities, the most profitable
In a recent Idealista report, Alicante shows strong cost efficiency for those buying to rent in the traditional market, with an average yield around 6.7% — higher than bank time deposits and significantly above the euro area benchmarks. This rate stands even as a reference since commercial spaces can deliver around 7.8% and other types of properties, like offices, can push toward 8.3%. Parking spaces tend to be the least profitable, at roughly 4.9%.
That said, Alicante is increasingly populated by people choosing to rent or move into inherited homes rather than purchase anew, underscoring a shift in living patterns as the market evolves.
Observers now wonder what the new housing law will mean for the broader market. Some reports suggest an upper income cap and regulatory uncertainty could reduce the stock by as many as 100,000 homes across Spain, while others contend that some properties simply convert to more lucrative tourist rentals rather than exiting the market altogether.
Among middle-income taxpayers, the latest personal income tax statistics show the majority who declare rental income in the Valencia Community come from households earning between 30,000 and 60,000 euros. Those with higher incomes tend to report larger returns, driven either by more valuable properties or by owning a greater number of units. On average, rental income sits around 7,295 euros annually, but those declaring annual earnings above 600,000 euros can report averages nearing 24,949 euros.