Buy property in joint names?
#16
Forum Regular
Joined: Oct 2013
Posts: 46
Re: Buy property in joint names?
I got conflicting advice as to whether any imputed income is payable in Spain (if a permanent Spanish resident) on a retained UK property that isn’t rented out – or has a large void period between lets.
One lawyer told me “Yes, there is imputed income”. Another said “No, there isn’t”. But I couldn’t pin either of them down as to what the law actually says.
May I ask if your lawyer was able to provide you with the definitive law on this matter? I can't get to grips with it.
Regards
#17
Lost in BE Cyberspace
Joined: Feb 2008
Posts: 5,613
Re: Buy property in joint names?
Hi Bob,
I got conflicting advice as to whether any imputed income is payable in Spain (if a permanent Spanish resident) on a retained UK property that isn’t rented out – or has a large void period between lets.
One lawyer told me “Yes, there is imputed income”. Another said “No, there isn’t”. But I couldn’t pin either of them down as to what the law actually says.
May I ask if your lawyer was able to provide you with the definitive law on this matter? I can't get to grips with it.
Regards
I got conflicting advice as to whether any imputed income is payable in Spain (if a permanent Spanish resident) on a retained UK property that isn’t rented out – or has a large void period between lets.
One lawyer told me “Yes, there is imputed income”. Another said “No, there isn’t”. But I couldn’t pin either of them down as to what the law actually says.
May I ask if your lawyer was able to provide you with the definitive law on this matter? I can't get to grips with it.
Regards
#18
Lost in BE Cyberspace
Joined: Feb 2008
Posts: 5,613
Re: Buy property in joint names?
I would also think that if the property was vacant for a period it would have to be over the period of the tax year. I say that because if it was let for a month over the tax year and empty for say 8 months then let again you would still put in a UK tax return declaring the income. You would have no tax to pay due to allowances but you would have legally declared. I did ask about it to a solicitor and a gestor both more or less intimated don't bother re UK property. Of course that's not a legally binding response. I often wonder how one would calculate imputed income on UK property. It's easy enough re spanish property as its based on the valor catastral so in the UK that really would relate to the old rateable value. But UK did away with and uses tax bands re council tax. It would be interesting to know if anyone does actually pay it on a UK property? Mind I guess most who retain a UK property have them rented negating need to pay in Spain.
#19
Forum Regular
Joined: Oct 2013
Posts: 46
Re: Buy property in joint names?
Thanks for the replies, Bob. Much appreciated.
Yes, I read about that imputed UK rental income a long time ago on a now defunct blog. Can’t find it anywhere.
And now I’ve got 2 lawyers giving diametrically opposing views without backing it up. I do well to get more than one vague sentence in reply, which doesn’t inspire much confidence either way.
Yes, I read about that imputed UK rental income a long time ago on a now defunct blog. Can’t find it anywhere.
And now I’ve got 2 lawyers giving diametrically opposing views without backing it up. I do well to get more than one vague sentence in reply, which doesn’t inspire much confidence either way.
#20
Forum Regular
Joined: Oct 2013
Posts: 46
Re: Buy property in joint names?
Bob,
It’s now 2-1 in favour of having to pay notional rental income tax on a vacant UK property.
Just found this paragraph from Blevins Franks:
“This notional rental income also applies to overseas properties owned by Spanish residents. In this case, it is 50% of the acquisition price that is used to calculate the annual charge, which is 1.1% of the value. The corresponding amount will be then taxable at 19% or 24%, as indicated above. Non-Spanish residents will only need to pay this tax if they have a Spanish property not rented out (i.e. a holiday home in Spain available for them).”
Shows how crazy the system is. One could have bought and retained a house in prime central London decades ago for a few tens of thousands, so the notional rental income tax payable today would be loose change, even though the property would now be worth many millions. Yet, a recently purchased bog-standard UK property costing just the national average would pay more tax...
It’s now 2-1 in favour of having to pay notional rental income tax on a vacant UK property.
Just found this paragraph from Blevins Franks:
“This notional rental income also applies to overseas properties owned by Spanish residents. In this case, it is 50% of the acquisition price that is used to calculate the annual charge, which is 1.1% of the value. The corresponding amount will be then taxable at 19% or 24%, as indicated above. Non-Spanish residents will only need to pay this tax if they have a Spanish property not rented out (i.e. a holiday home in Spain available for them).”
Shows how crazy the system is. One could have bought and retained a house in prime central London decades ago for a few tens of thousands, so the notional rental income tax payable today would be loose change, even though the property would now be worth many millions. Yet, a recently purchased bog-standard UK property costing just the national average would pay more tax...
#21
Lost in BE Cyberspace
Joined: Feb 2008
Posts: 5,613
Re: Buy property in joint names?
Bob,
It’s now 2-1 in favour of having to pay notional rental income tax on a vacant UK property.
Just found this paragraph from Blevins Franks:
“This notional rental income also applies to overseas properties owned by Spanish residents. In this case, it is 50% of the acquisition price that is used to calculate the annual charge, which is 1.1% of the value. The corresponding amount will be then taxable at 19% or 24%, as indicated above. Non-Spanish residents will only need to pay this tax if they have a Spanish property not rented out (i.e. a holiday home in Spain available for them).”
Shows how crazy the system is. One could have bought and retained a house in prime central London decades ago for a few tens of thousands, so the notional rental income tax payable today would be loose change, even though the property would now be worth many millions. Yet, a recently purchased bog-standard UK property costing just the national average would pay more tax...
It’s now 2-1 in favour of having to pay notional rental income tax on a vacant UK property.
Just found this paragraph from Blevins Franks:
“This notional rental income also applies to overseas properties owned by Spanish residents. In this case, it is 50% of the acquisition price that is used to calculate the annual charge, which is 1.1% of the value. The corresponding amount will be then taxable at 19% or 24%, as indicated above. Non-Spanish residents will only need to pay this tax if they have a Spanish property not rented out (i.e. a holiday home in Spain available for them).”
Shows how crazy the system is. One could have bought and retained a house in prime central London decades ago for a few tens of thousands, so the notional rental income tax payable today would be loose change, even though the property would now be worth many millions. Yet, a recently purchased bog-standard UK property costing just the national average would pay more tax...
#23
Forum Regular
Joined: Oct 2013
Posts: 46
Re: Buy property in joint names?
On the one hand, I suppose the owner of the UK property could argue that they have no access to it, can’t enjoy it as a holiday home, and so can’t use it as a base whenever they’re in the UK
On the other hand, the Spanish authorities could argue that it’s the owner’s choice not to charge rent, in which case there’s notional rent to pay
I remain clueless
#25
Forum Regular
Joined: Nov 2013
Posts: 287
Re: Buy property in joint names?
Watching with interest.... Our former UK primary residence is left without any rental income, However, our son stays over the occaisonal night to satisfy our UK house insurance.
I can understand Spain invoking a Spanish tax to calculate a "number" based on the cadastral based on the value of a Spanish property. However, how would this work for property in the UK? Would this be based on the council tax bands? or on the old rates system? or on some notional value?
I have to be honest and disclose that I don't offer the UK HMRC, or Spain, any chance to charge me a "non resident tax" for my UK property. I could be wrong but I will not be paying this tax.
I can understand Spain invoking a Spanish tax to calculate a "number" based on the cadastral based on the value of a Spanish property. However, how would this work for property in the UK? Would this be based on the council tax bands? or on the old rates system? or on some notional value?
I have to be honest and disclose that I don't offer the UK HMRC, or Spain, any chance to charge me a "non resident tax" for my UK property. I could be wrong but I will not be paying this tax.
#26
BE Enthusiast
Joined: May 2019
Posts: 640
Re: Buy property in joint names?
If you have a UK property you have to declare it on your modelo 100 ( and of course on your 720). In the tax declaration you will fill out a box relating to valor castral etc this will set the imputed tax. So it has to be on every tax declaration even if its empty. The castral value is basically your council tax band value not the purchase price. If you do use it or someone else does you put number of days and you should also put who that is but most people don't really do that as it only really works for NIE/DNI numbers. Another reason why you need a proper accountant to do your tax.
#27
Lost in BE Cyberspace
Joined: Feb 2008
Posts: 5,613
Re: Buy property in joint names?
See Palmersones link he previously posted from Blevins Frank's. Basically the Spanish imputed rental on a UK property is based on 50% of price paid when bought and you pay tax at 1.1% tax on that value. It's not council tax bands. As for declaring it on your 720 yes you do if you paid more than 50,000 euros when purchased. However nowhere on the 720 do you show if the property is rented all you show is value based on price purchased and percentage of the property you own. The fact it's rented is shown on your Spanish renta declaration income earned which is taxable in UK.
#28
Lost in BE Cyberspace
Joined: Feb 2008
Posts: 5,613
Re: Buy property in joint names?
Watching with interest.... Our former UK primary residence is left without any rental income, However, our son stays over the occaisonal night to satisfy our UK house insurance.
I can understand Spain invoking a Spanish tax to calculate a "number" based on the cadastral based on the value of a Spanish property. However, how would this work for property in the UK? Would this be based on the council tax bands? or on the old rates system? or on some notional value?
I have to be honest and disclose that I don't offer the UK HMRC, or Spain, any chance to charge me a "non resident tax" for my UK property. I could be wrong but I will not be paying this tax.
I can understand Spain invoking a Spanish tax to calculate a "number" based on the cadastral based on the value of a Spanish property. However, how would this work for property in the UK? Would this be based on the council tax bands? or on the old rates system? or on some notional value?
I have to be honest and disclose that I don't offer the UK HMRC, or Spain, any chance to charge me a "non resident tax" for my UK property. I could be wrong but I will not be paying this tax.
#29
Re: Buy property in joint names?
Bob,
It’s now 2-1 in favour of having to pay notional rental income tax on a vacant UK property.
Just found this paragraph from Blevins Franks:
“This notional rental income also applies to overseas properties owned by Spanish residents. In this case, it is 50% of the acquisition price that is used to calculate the annual charge, which is 1.1% of the value. The corresponding amount will be then taxable at 19% or 24%, as indicated above. Non-Spanish residents will only need to pay this tax if they have a Spanish property not rented out (i.e. a holiday home in Spain available for them).”
Shows how crazy the system is. One could have bought and retained a house in prime central London decades ago for a few tens of thousands, so the notional rental income tax payable today would be loose change, even though the property would now be worth many millions. Yet, a recently purchased bog-standard UK property costing just the national average would pay more tax...
It’s now 2-1 in favour of having to pay notional rental income tax on a vacant UK property.
Just found this paragraph from Blevins Franks:
“This notional rental income also applies to overseas properties owned by Spanish residents. In this case, it is 50% of the acquisition price that is used to calculate the annual charge, which is 1.1% of the value. The corresponding amount will be then taxable at 19% or 24%, as indicated above. Non-Spanish residents will only need to pay this tax if they have a Spanish property not rented out (i.e. a holiday home in Spain available for them).”
Shows how crazy the system is. One could have bought and retained a house in prime central London decades ago for a few tens of thousands, so the notional rental income tax payable today would be loose change, even though the property would now be worth many millions. Yet, a recently purchased bog-standard UK property costing just the national average would pay more tax...
#30
Lost in BE Cyberspace
Joined: Feb 2008
Posts: 5,613