Palmerston

I read that the imputed rental income of a UK property is based on 50% of the original purchase price, multiplied by 1.1% (because there is nothing comparable to the Spanish Cadastral Value). I understand that that base figure is then taxed at your marginal income tax rate.

Unfortunately, I can't find a link to confirm this. Is anyone able to help?

Thanks

Fred James

This is what you want.

Imputación de rentas; incluso por los inmuebles en el extranjero

A lot of people who still own UK property are unaware of this tax. Anyone who has submitted a Form 720 including UK property and has not paid this tax will eventually have a problem.

snikpoh

I thought ones rateable value in UK was akin to the Spanish Cadastral value (albeit a range and not an exact figure?)

Other than that I can't confirm the equation.

Our posts crossed @Fred James. So if it talks of acquisition value, if a property is inherited, is it the value used at probate?

Obviously for properties that were bought a long time ago, there will be little to pay!

Fred James

The method of calculation is the same as they use for wealth tax and that's how it has always been done.

Palmerston

That's great, just what I needed but couldn't find. Thanks Fred.

Palmerston

Yeah, that makes sense. I'm not resident yet and have just bought my UK base (as a safety net) in anticipation of moving to Spain. My last 2 attempts to buy in Spain resulted in the Spanish vendors deciding to whack the price up as soon as I expressed interest!

I wanted to avoid getting hammered for CGT, should I later decide to sell the UK base as a Spanish resident. I'd owned my previous home for 20+ years, so would have taken a big hit if I were to sell it.

The extra imputed rental tax on my new UK base would pale into insignificance compared to the potential CGT bill on my previous home.

Palmerston

I never knew that, Fred.

So, just to be sure I've got this straight, does that mean that if a tax resident has retained a UK home, the value of that property for the wealth tax form is half the purchase price?

But it would be the full purchase price for Modelo720?

I always thought Hacienda went for the highest figure possible to maximise their revenue, as they always seem to use the greater of the Cadastral value or purchase price in the case of the Spanish property.

Apologies if I've got the wrong end of the stick.

Fred James

It's 50% for the Imputed Tax and Wealth Tax, but for the Form 720 it's 100%.

Palmerston

Thanks Fred. Much appreciated