Sell or rent out a home on the Costa del Sol?

Sell or rent? Leaving a property empty is a missed opportunity: it deteriorates over time, racks up costs and brings in no income. Faced with that scenario, there are two clear paths: sell to obtain immediate liquidity, or rent and turn the home into a source of recurring income. There isn’t a one-size-fits-all answer; there is an informed decision that matches your goals, finances and time horizon.

It depends on your personal situation, your financial expectations and also the current market in your area. What’s clear is that both options offer pros and cons worth weighing calmly.

• Table of contents
• Selling: immediate liquidity and closing a chapter
• Renting: recurring income while preserving your asset
• What truly sets the two options apart?
• So, which makes more sense?
• FAQs about selling or renting a home
• Homewatch: strategy, execution and results

Selling is, in many cases, the fastest way to convert a property’s value into available capital. The owner gets liquidity right away, which can be reinvested in another property, used to start a business, pay off debt or simply strengthen financial security. Once the deal is done, the ongoing worries about maintenance, taxes and other property-related costs disappear.

That said, selling also means parting with an asset that could continue to appreciate over time. The gain is taxed as a capital gain, which reduces the net benefit, and you also give up the security of owning an asset that could be useful in future or passed on as an inheritance. In short, selling is a strategic decision: it can be very advantageous if the market is favourable, but it does reduce long-term wealth.

Upshot in one line: you complete the deal, get paid and stop thinking about bills, issues and upkeep.
Keep in mind: selling reduces your asset base and future appreciation potential. The gain is taxed (income tax and municipal capital gains), which affects net returns. It’s a multi-step process (valuation, pricing strategy, marketing, viewings, negotiation, completion) that moves faster with a professional team.

Market cues that favour selling

• The current market price comfortably meets your financial targets.
• You need liquidity in the next 6–12 months.
• The property needs renovations you don’t want to undertake.

Renting is the go-to option for those seeking passive income without giving up the property as part of their wealth. A stable monthly rent can be a very attractive complement and, in some cases, cover the mortgage or other expenses. An occupied home also tends to be better maintained and is less vulnerable to squatting.

Renting does require involvement. The landlord remains responsible for maintenance, handling issues and complying with legal and tax obligations linked to the tenancy. There’s also a risk of non-payment, though this can be mitigated with careful tenant screening, additional guarantees or the support of a specialist agency. In return, you keep the asset and retain exposure to future appreciation.

Upshot in one line: you preserve your asset and receive a monthly rent; in many cases it can cover the mortgage.
Keep in mind: it involves ongoing management (tenant selection, issues, minor repairs, tax filings). You can delegate to an agency to minimise friction and optimise occupancy.

Rental formats to consider

• Long-term (tenant’s primary residence): stability and lower turnover.
• Mid/short-term or seasonal (not primary residence): flexibility and the ability to adjust pricing with demand, with more management and seasonality.

It mainly comes down to the nature of the benefits: selling brings immediate cash in a single transaction, while renting generates smaller but steady income over time. The level of commitment differs too: selling means walking away from the property for good, whereas renting requires ongoing oversight, though you can delegate to professionals.

From a tax perspective, both options carry obligations but with different timing. A sale hits your income tax and municipal capital-gains tax in one go, whereas rental income is declared periodically, with potential deductions and reductions if it’s a primary-residence lease.

There’s no single right answer. If you prioritise liquidity, simplicity and closing a chapter, selling fits. If you want passive income while keeping the asset and you’re comfortable delegating management, renting is a solid, sustainable bet. The key is to make your property work for you: turn an idle asset into a real opportunity that improves your finances and peace of mind.

Ultimately, analyse each case on its own merits, your financial, tax and asset needs, and seek advice from professionals who know the local market well.

What taxes apply when selling a property?
The gain is taxed in your income tax return as a capital gain (rates typically ranging from 19% to 26%, depending on the profit). You’ll also need to pay the municipal capital-gains tax. Check the official tax authority’s website for your exact calculation.

What taxes apply when renting out a property?
Rental income is treated as income from real estate capital and must be declared in your income tax return. For primary-residence leases, reductions can apply, up to 60% of the declared net rental income in some cases, making renting attractive from a tax standpoint.

What are the main risks when renting?
Non-payment is the primary risk, along with potential damage or contractual disputes. To reduce risk, screen tenants thoroughly, use a detailed contract and, where possible, work with a professional agency.

At Homewatch, we guide Costa del Sol owners to choose, and execute, the best strategy. If you decide to sell, we maximise price with a professional valuation, positioning and negotiation. If you prefer to rent, we handle everything: tenant selection, contracts, rent collection, maintenance and issues.

Explore our property portfolio as well and see real comparables in your area.