Hi there

I was wondering what people think is the minimum amount needed to live reasonably comfortably in Spain at the moment ?

The reason that I ask is that me and my other half are thinking of retiring early this summer (I will be 48 and she will be 46) to our villa in Javea (which has no mortgage).

Our plan is to live off rental income from a house we own in the UK (no mortgage) supplemented by savings until my private pension kicks in in 7 years. And then state pension a few years after that too.

So for the next 7 years our estimated net income (net of tax and property management fees) is expected to be c, 28,000 euros per annum / 2,333 per month, rising to 40,000 euros per annum / 3,333 per month when my pension kicks in in 7 years time.

We don't have any kids or relatives to support, drink but don't smoke. We both cook well and so would only be looking to maybe eat out once or twice a week. And we have already both travelled extensively already so have no big desire to travel the world for the next few years.

We're just trying to work out whether we have enough money to do what we want to do what we do (hopefully we do !), sometimes the sums look fine and sometimes they look a bit tight.

Any help/advice would be gratefully received !

Thanks

Paul

As always it depends on the individual and it's more than most Spanish will ever have. However, just relying on rental income is risky and do you have enough savings if something goes wrong?

Hi Moses

Thanks for the advice.

Yes forgot to say - we will have savings of c. 70,000 euros to rely on/acces in an emergency now/for the next couple of years and then access to personal pension pot too in 7 years when I turn 55 if necessary

I see you mention "Net Income" but is that net of the Spanish Income Tax that they will want after you become a permanent resident, anything over €37.000,- is about 37%, up to that you will be looking at an average of about 25%.
Otherwise you will need to have private health scheme to start and/or make voluntary contributions to the State system if you wish to use local medical services.
Running a car is always a sizeable chunk of most people's disposable income and then the utilities, while groceries will be cheaper than UK as is eating out/drinking, not a lot else is.

Many live comfortably on a lot less than that, and when you get your UK pension pot lump sum ( taxable in Spain) and your state pension, you will have more money than you know what to do with

I hope you are aware tax from UK rental income should be deducted at source for non resident landlords.

https://www.gov.uk/tax-uk-income-live-abroad/rent

Check out the Non-resident landlord scheme. Get form NRL1i

https://www.gov.uk/government/public...ividuals-nrl1i

You get UK rental income gross, but have to do a UK tax return. You will also have to declare the income on your Spanish tax return and pay the tax here. The allowances for landlords are better in Spain.

That is covered in the link I posted >

Yes Spain still allows you to offset mortgage interest payments against income tax, whereas I think the UK now only allows it for income beneath the base rate tax band.

For this reason it might be worth the OP taking out a mortgage against his UK property before moving to Spain, as he may be able to offset tax in both countries.

Let me clarify that to avoid confusion.

Spain allows mortgage payments against the rental income which should reduce the income tax you pay on the profit. The entire payment is allowable, not just the interest. If the rental contract is for a long term let as a dwelling (rather than holiday lets) then there is a 60% allowance against the income.

In case someone should read this and assume that the mortgage tax relief applies to the purchase of your own home in Spain, that used to be the case, but sadly no longer.

That's plenty, considering you haven't got any mortgage payments. In fact I am in a similar position (48 next month) and with a similar income from property in UK. I still work (in Madrid) because we've got young kids, and I need to contribute a bit longer into the Spanish social security system to qualify for a pension, but if it wasn't for that I'd be able to consider early retirement from a financial point of view.

Sorry but do not agree with that. Worth double-checking .Originally you could offset against tax a mortgage on your own home but once that is rented out you can only deduct the interest on the mortgage not the total value of the monthly payments.

Here is a pretty comprehenisve list of what you can deduct :
Qué gastos puedes desgravar del alquiler que cobras

As a Non-Resident you will end-up paying approximately 19% tax on any "profit" from the rental and you need to file every three months.

Yes, you are right, the capital payments only apply to a home loan (sadly no more). I must admit, I never understood why they were so generous with home loans - the tax relief was immense although it did have a cap on it.

I always assumed it was a scam to encourage people to take out bigger mortgages, push up house prices, etc. We still do get the rebate as we took out our mortgage before 2012, when it was last removed (I think Zapatero previously got rid of it in 2010, but then Rajoy stupidly reintroduced it again, and then in 2012 he was told to remove it).

It is indeed a significant amount of money. We pay down the maximum rebatable amount on our mortgage each year (€18000 for two people) and get back over €3000. With interest rates so low in recent years this amount has been more than our interest payments. We've actually made money from our mortgage!