mikeglover

I am not sure if i have read this correctly but it appears to say on the ADVOCO website that when fillling in a spanish tax return, there is a 50% rent deduction (even if the rent is from a uk property) when calculating taxable income. i.e rent on uk property is £ 8,000 for the year but only £ 4000 is counted for tax purposes. Have i read this right or am i just being overly optimistic?

CapnBilly

That's correct. You only pay tax on a portion of the net income. I think I read somewhere that this year it's 40% (it was 50% last year). Obviously you can also offset the tax already paid in the UK ( upto the amount of Spanish tax payable)

mikeglover

That is the only bit of good news concerning spanish tax i have ever heard. It even makes it a good idea to transfer all those assets in uk over 50 grand into buy to lets !!!

CapnBilly

You'd still have to pay UK tax on the income though.

mikeglover

Thats true. Ive always been happy paying that, but what worried me was that, as the Spanish tax rate is higher( about 24% compared to uk 20%), and the tax free threshold is only about 5000 e, (uk £ 8105) i would also get clobbered for a big balance in spanish tax.

spainrico

I think their are 'terms and conditions' to qualify for this reduction - it is not for holiday lets only long term and I think it also depends on the tenants and rental contract.

mikeglover

I dont suppose there is anyone out there who rents out a uk property who completes a spanish tax return who would be able to tell me what those conditions are?

spainrico

I thought tax on UK rental income had to be paid in the UK and under double taxation treaty was exempt in Spain.

The Spanish tax reductions/allowances on rental income apply to Spanish properties.

Fred James

Income from UK rentals is taxed in the UK but it is also taxable in Spain if the owner is tax resident in Spain.

The same rules about deductions that apply to Spanish property also apply to UK property. The rental contract must be a long term contract, not a holiday let.

spainrico

Thanks Fred.

Is there something about the age of the tenant also - under 35's you get the allowance? As an encouragement to rent to youngsters.

mikeglover

Just found this site which appears to say that the deduction is 60% as long as it is not a holiday let. It didnt mention age of tenant but i am sure i have seen mention of age 30 or 35 somewhere before, a year or so ago.

billgates

Why would you want to lose money buying up depreciating assets?

Didn't you hear? UK property is at the peak of the biggest property bubble in history.

Brano77

Is it correct that in addition to the normal deductions ( insurance, agents fees, maintenance, gas/electrical inspections, etc) against gross rental income you can if you have a mortgage on the property deduct interest and the capital repayment element as suggested on the Advoco.es site?

spainrico

Only if it is your primary residence.

Fred James

No I think that applies to any property.

If it was your primary residence it is very unlikely that you would be letting it.