More Valencian residents depend on rental income as a principal source of earnings. While big investment funds or famous names often come to mind when prices rise in recent years, the real story is driven by individuals who manage rental units. They are both beneficiaries and participants in the uptick of tourist apartments.
According to the latest data from the Tax Office, 311,684 Valencian residents reported income from this activity in 2021. That year showed a 5 percent rise from the previous one and, compared with five years earlier, an increase of 28 percent, roughly 68,000 more cases.
The monetary impact is even clearer. Total income from this activity rose from 1.657 million euros in 2016 to 2.273 million euros in 2021. This 37 percent growth reflects not only more properties available for rent but also higher rental prices.
In this sense, it is noteworthy that the figure has risen by 10 percent in the last year alone, and it does not yet reflect the sharpest rent increases seen in 2022 and 2023.
more control
Antonio Pérez-Rovira, chair of the Financial Committee at the Alicante College of Economists, attributes the rise in rents declared in tax returns to several factors. The first is stronger fraud controls by the Tax Office, which uses increasingly sophisticated methods to detect properties listed as active even if owners claim vacancies. From electricity usage to cross-checking data from different taxpayers, there are gaps that the Treasury does not monitor consistently.
Buying or renting a house? This is the situation in Alicante
Pérez-Rovira notes a growing trend of citizens choosing to invest savings in property to profit from rent or by listing properties on the market, even if some units are only occupied part of the year to meet tourist demand.
“There are clients in the summer who relocate to family homes and rent out their own properties to maximize profits. I am also seeing chalets in towns like Jávea that aren’t necessarily in prime locations. They can bring in between 18,000 and 20,000 euros through summer rental via online platforms.”
In every case, the middle-income brackets record rents that are still substantial but lower overall. The last year saw an average tax declaration of 7,295 euros per unit. It is worth noting that about two thirds of declared rents relate to habitual residences rented to local tenants. Compared with tourism, residential rentals often offer lower profitability, yet they still benefit from favorable tax treatment that has supported gains in the sector. Until recently, profits from such rentals enjoyed a sizable tax relief of about 60 percent.
With the new Housing Act, the rate has generally been adjusted to 50 percent. In high-demand areas, the relief can rise to as much as 90 percent for landlords who keep rents within capped levels.
facilities, the most profitable
The latest Idealista portal report shows that in Alicante the cost efficiency of buying a home to rent in the traditional market stands at about 6.7 percent on average, higher than most bank deposits or the general bond market. In the city last April, Eurostat reported a benchmark of 1.64 percent for bank time deposits, with office properties reaching around 7.8 percent and commercial buildings about 8.3 percent. Parking spaces tend to be the least profitable at around 4.9 percent.
More and more people from Alicante live in rental or inherited homes
The market’s next chapter depends on the new housing law. Some analyses suggest the income cap and legal uncertainty could push as many as 100,000 homes across Spain toward different use, while others argue that many of these properties have already shifted toward more lucrative tourist rentals.
In the hands of middle-class taxpayers
Recent personal income tax statistics show that the majority of Valencia Community taxpayers who declare rental income belong to the 30,000 to 60,000 euro income bracket. Those with higher incomes typically earn more from rental activity because their properties are more valuable or they own more units. The average annual rental income stands at about 7,295 euros, while for those declaring earnings above 600,000 euros per year, the average rises to roughly 24,949 euros.