Almost every owner we sell to in Torrevieja and Orihuela Costa asks the same question sooner or later: should I let my home to one tenant all year, or to holidaymakers by the week? The honest answer depends on the property, on where you are tax resident and on how much of your own time you want to give it. The rules have also moved fast: a stricter Valencian tourist-letting regime since 2024, a new veto for communities of owners since 2025 and, on 8 October 2026, a national housing decree that touches seasonal contracts and the VAT on short stays. This guide sets out how each model works today, what you will pay in tax as a resident or non-resident, and how to compare the real net income.
Long-term, seasonal or holiday: three different businesses
In the Vega Baja there are really three ways to let a home, and each falls under a different set of rules:
- Long-term rental (vivienda habitual): the tenant makes it their main home. It is governed by the Urban Leases Act (Ley 29/1994, LAU) and the tenant enjoys strong protection. Typical tenants are local families, people working in Torrevieja or Orihuela, and foreign residents who have moved here for good.
- Seasonal or temporary rental (arrendamiento de temporada): more than 31 days and, as a rule, no more than 12 months, for someone temporarily away from their usual home. On the coast this is the classic “winter let” to northern European retirees from October to April.
- Holiday or tourist rental (vivienda de uso turístico): short stays, registered with the Generalitat Valenciana and governed by tourism law, not the LAU.
The choice also shapes your workload. A long-term tenant needs a good contract and a yearly check. A holiday flat needs cleaning, laundry, key handover, guest registration and someone who answers the phone on a Sunday in August. If you are not here, that someone is a paid manager.
Long-term lets under the LAU: duration, deposit and rent updates
If the landlord is a private individual, a long-term contract runs for at least five years (seven if the landlord is a company): the tenant can extend year by year up to that limit, even if the contract says one year. After five years there is a further tacit extension of up to three years unless either side gives notice. The tenant may leave after the first six months with 30 days' notice.
- Deposit (fianza): one month's rent, which in the Comunitat Valenciana must be lodged with the regional housing body. Extra guarantees are capped at two months' rent.
- Agency fees and contract costs: since Ley 12/2023, the landlord pays the agency's letting fee, not the tenant.
- Rent updates: annual increases are limited to a reference index (the IRAV) published by the INE. The October 2026 decree adds a further cap on updates until 31 December 2027.
- Stressed-market zones: the 2023 Housing Act allows regions to cap rents in “zonas tensionadas”. As of October 2026 the Generalitat Valenciana has not declared any, so there is no rent cap in Torrevieja or Orihuela Costa today; this could change.
For realistic rent levels by area, see our long-term rental prices guide and the homes currently on our long-term rentals in Torrevieja page.
Holiday lets: the VT licence, your community and the 10-day rule
To advertise a home to tourists in the Comunitat Valenciana you need it registered in the regional Tourism Register and its VT number on every advert. Since Decreto-ley 9/2024 that means, among other things, a municipal planning compatibility report (ICU) from Torrevieja or Orihuela town hall, registration of the whole dwelling only, renewal every five years and a cap of 10 consecutive days per stay for the same guest.
The bigger hurdle on urbanisations is the community of owners. Since 3 April 2025 (Ley Orgánica 1/2025), starting a tourist activity in a building or complex under horizontal property requires the community's express approval by a three-fifths majority. Homes already registered before that date keep their status, which is why an existing, valid VT registration can add real value to a resale apartment in La Zenia or Playa Flamenca.
You must also register every guest with the Interior Ministry's SES Hospedajes system. We cover the full procedure in our holiday rental licence guide.
The October 2026 housing decree: what changes for owners
Real Decreto-ley 29/2026, published in the BOE on 7 October 2026 and in force since 8 October, changes several things that matter here. As a decree-law it must be validated by the Spanish parliament within 30 days, so check its final status before acting on it.
- Seasonal contracts must have a real, provable reason for the tenant being away from their usual home, and the reason must be stated in the contract. Without it, or if the contract exceeds 12 months, or after more than two consecutive renewals with the same tenant, the law treats it as a long-term lease with full LAU protection. For winter lets, put the tenant's permanent address abroad and the purpose of the stay in writing.
- Room-by-room letting is now expressly a housing lease, and the sum of the room rents cannot exceed the rent of the whole home.
- VAT on short stays: from 1 December 2026, furnished homes let to the same guest for 30 nights or fewer lose their VAT exemption and are taxed at 10%, unless the home is the landlord's habitual residence. Longer lets stay exempt.
- IBI surcharge: town halls in declared stressed-market zones may add up to 50% to the property tax on tourist homes (more for owners of several). No such zone exists in our area yet.
Tax for non-residents: Modelo 210 at 19% or 24%
If you are not tax resident in Spain, rental income is declared on Modelo 210 (non-resident income tax, IRNR). The rate depends on where you are tax resident, not on your passport:
- Residents of the EU, Iceland and Norway: 19% on the net income. You can deduct the expenses linked to the letting: IBI, community fees, insurance, repairs, utilities you pay, mortgage interest, management fees and depreciation of the building, proportionally to the days let.
- Residents of other countries, including the UK: 24% on the gross income, with no deductions under current law. Court rulings have questioned this difference and the matter is still being litigated, so ask your adviser whether a claim is worth making.
New deadlines: under Orden HAC/623/2026, rental income earned from October 2026 onwards is declared once a year, from 1 to 20 April of the following year (direct debit 1 to 15 April). Income from July to September 2026 is still filed by 20 October 2026. For the days your home is not let, you also owe tax on imputed income (generally 1.1% or 2% of the cadastral value, at 19% or 24%); for 2026 that return moves to 1 April to 31 December 2027. Source: Agencia Tributaria note on Orden HAC/623/2026, checked 14 October 2026.
Tax for Spanish residents: why long-term letting is favoured
Once you are tax resident in Spain, rental income goes into your annual IRPF return with your other income, at progressive rates, and expenses are deductible in the same way. The key difference is the reduction for lets to a tenant's main home. Under Ley 12/2023, for contracts signed since 26 May 2023 the general reduction is 50% of the net income, rising to 60%, 70% or 90% only in specific cases (refurbished homes, or new contracts in stressed-market zones). Older contracts keep the previous 60%.
Holiday and seasonal lets get no reduction, and if you provide hotel-type services the activity can become a business with VAT. For a resident, that 50% reduction often closes much of the gap between a busy holiday flat and a steady long-term tenant once tax is counted.
Running the numbers: a worked example in Orihuela Costa
Take a two-bedroom apartment in La Zenia. On a long-term contract it would typically let for approximately €850–1,150 a month; say €950, or €11,400 a year. With no agency costs after the first year and the tenant paying utilities, an owner resident in the EU who deducts, for instance, €3,400 of IBI, community fees, insurance and depreciation pays 19% on €8,000: about €1,520. A UK resident pays 24% on €11,400: about €2,736.
For the same flat as a holiday let, work out honestly:
- How many weeks you can realistically fill outside July and August.
- Management (commonly a percentage of bookings), cleaning, laundry and platform fees.
- Utilities, wifi, insurance and wear and tear, all paid by you.
- From 1 December 2026, whether 10% VAT applies to stays of up to 30 nights.
- The weeks you want to use the home yourself, which earn nothing.
In our experience, many owners who compare the two side by side find the gap smaller than the headline nightly rates suggest. Holiday letting tends to make most sense for homes near the beach with a VT registration already in place and for owners who want to use the property themselves part of the year. If you are still buying, browse our property for sale in Orihuela Costa with letting in mind.
How we help owners choose, and a note on advice
Before you decide, we can check whether your community allows tourist use, whether an existing VT registration is valid, and what a long-term tenant would realistically pay for your home today. We then put both scenarios on one page so you can compare net figures, not promises. Contact us with the address and a few photos and we will come back with an honest view.
This guide is general information based on the rules in force on 14 October 2026, including a decree-law still awaiting parliamentary validation. It is not legal or tax advice: confirm your own situation with a Spanish lawyer or tax adviser before signing a contract or filing a return.