MikeJ

Anyone know the position re Income Tax? - I've searched the Spain forum and checked out the free beer but I cannot find anything useful. I understand that the wealth tax has been replaced by Income Tax (but it is based on the 'value' of your property - Questions?
Is this cadastral or market value?
I understand why any rental income needs to be declared but why should capital (ie property) be treated as income?
I thought that through the UK Inland Revenue bi-lateral agreement with Spain that you could declare and pay tax on overseas investments in the UK (if you're a UK taxpayer) - is this true?
If we need to pay Income Tax - how do we go about it? I'm not keen on paying a gestator or lawyer to complete my tax return - could end up more than the tax due
These - and other questions - I would dearly like the answers to. Can anyone help?
Mike J

guesswork

Wealth Tax has not been replaced by Income Tax, Income Tax was there before.
If you do not rent your place out you are still Taxed a form of Income Tax based on the value of your property. The value can be taken as the Catastral Value or proper value minus any mortgage. I have been told the advantage of using the Catastral value is that it will always stay relatively low even when you have paid off any mortgage.

I am no expert and have paid to get my return done. This year ADA did mine for 100euro, next year the bill will be less. This is due to them not having to obtain my details from the authorities.

If you do rent out your place I believe the Tax is 25% of your gross income

John and Lynn

Hi Mike,

The below below expalins the taxes and rates etc. Hope it helps?

http://www.spanishpropertyinsight.co...non-residents/

As far as I am aware, now that the Wealth Tax is no more, the only one that needs to be paid is the "Income tax for non-residents who do not rent out their property (standard declaration)", unless you rent of course?

Regards
John

big wheels

[QUOTE=guesswork;. This year ADA did mine for 100euro, [/QUOTE]


How much!!!!!


Download the form here and fill it in yourself. It's easy to do.
You will need the etiquetas (bar code stickers) to put on the first page. You can request these from the hacienda, or your gestor should have some spares if they have done it for you previously.

http://www.aeat.es/AEAT/Contenidos_C...10/mod210e.pdf

You should have been given a copy of your last form by your gestor, so simply copy everything onto it. Nothing will have changed unless your valor catastral has been reviewed. (hardly likely with a recent build)

Don't forget that if the property is registered in joint names, you both need to fill out the 210 form, just divide the amount due by 2.

Take the completed form(s) to the bank, make the payment and get the form(s) stamped. And then hand them in to the hacienda office. If you are lucky the bank will post them for you.

MikeJ

Thanks for that John - very helpful (but not quite enough ). We do rent a little. I assume that the tax is payable on either the gross income or the 2% of the cadastral value whichever is greater ? Or is it the sum of the two?
Do you know how and if the bilateral tax arrangements between Spain and the UK mean that I can declare and pay the tax in my UK Tax Return (which I'm just about to do?) . Now the UK authorities are tightening up on overseas property the Spanish bank has to give them details of my Spanish income so that they can ensure I pay tax on them. I believe that paying UK tax would be beneficial as you can set expenses off against revenue which you can't do in Spain. It is also much easier because we are resident in the UK and unlikely to visit before the end of the year.

John and Lynn

Hi Mike,

Sorry but I can't help/advise any further. All I know is that my accountant advised me to do the Wealth and Income tax via the spanish forms and pay the spanish authorities. We don't rent, but he did say if we did, we could offset some of our expenses, flights, furniture, utilities and upkeep against rental income?

Fred James

If you are non resident and let your house in Spain you cannot offset anything against the rental income.

To Mike, if you rent your property then you pay tax on the rental income but you can reduce the "non resident" tax accordingly - ie if you rent for 6 months than you only pay half the notional tax but clearly you will pay tax in the actual rental income for the other 6 months.

You will end up paying two different taxes on two different forms - the actual rental tax has to be paid quarterly and the non resident tax paid annually.

You will be taxed on the actual rental income in the UK (with allowances against costs) but you will also have to pay 24% tax on it in Spain with no allowances. All you can do is deduct the Spanish tax from the UK tax bill (which will be less than the Spanish tax) so effectively you will pay no tax in the UK but you will pay the full tax in Spain.

It's not optional - Spain has first call on the tax for a property in Spain.

MikeJ

Thanks for that - you've confirmed the old saying - there only two things certain in this life and one of them is taxes

Woodzie

Big Wheels,
Thats great information. What is the Hacienda? When I went into the link you have given I notice that the form already has a bar code. Should I also get one from the hacienda, then go to the bank to pay & get the form stamped, then back to the hacienda to hand in the form?

Regards Kim

Mitzyboy

The other one being The X Factor apparently

big wheels

The Hacienda is the Tax office. You will still need the etiquetas from them as they contain amongst other things the code for your local tax office, which needs to be written on the form. Yes make the payment at the bank, make sure they keep their copy, stamp and give you back the rest of them. The form contains 7 pages if I recall correctly. Don't worry. The first three pages are three copies forming page 1 and the last four are four copies of page 2.
If you complete page one on line it will automatically complete the next two and the same with the second page.

The bar code already on the form is for some other use.

Woodzie

I have just had my forms completed for me by a UK based company. He charged me £20.00 for the two forms required (joint owners) Now I reckon thats a bargain. All I have to do is take the forms and payment to the bank. The firm also will arrange the bank payment if this isn't possible for some owners. He charges £15.00 per form for that service. So at worst the whole thing could cost £50.00. Still a bargain. I will post the contact details if anybody is interested. (I suppose thats allowed, is it?)
Regards Kim

angiescarr

That sounds like a useful service! I've owned an uninhabitable house, which then became a building site, and is now a part built house(still uninhabitable) for 5 years. In the first year, green as I was, I went to Hacienda and asked if I owed anything on my house. They said no but I don't think that was the right answer, because maybe I had asked the wrong question??? Who can I go to to sort this one out for me? I do speak Spanish fairly well, but I can't figure this one out! We have only just actually moved to Spain, live in a rental at the moment and don't know when the house will be habitable. Does anyone know if there are any reductions/benefits that will apply here? I don't mind paying taxes...as long as I can! I'm a bit scared of 5 years of unpaid dues though, especially as My British taxes aren't paid yet!

AndyS

I've used the tax service mentioned and am happy with them. They are called Spanish Tax Forms and you can find them through the Internet. Very helpful and quick to answer e-mails.

EsuriJohn

We are in a similar position to you we bought a plot in 2006. We have consulted a Gestoria and he consulted the tax head office in Madrid.

The result is as follows, as long as the building is under construction and wealth tax is zero we do not pay tax or the assumed rental income tax. When the house is complete we do. When this point occurs we have not yet found out is it from issue of the Licence de Obras or is it from when the completed property is inscribed on the escritura we don't yet know.

We were however caught for the last year of wealth tax based on the cadastral value of the plot inscribed on the first escritura.

Then 2 years where no tax is payable then the assumed income tax kicks in but at the same time we will become resident so that tax does not apply.

Complicated or what?