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taxation worries

taxation worries

Old Jul 7th 2017, 5:27 am
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Default taxation worries

hi was wondering if anyone can tell me about thr taxation on a rental property in Granada/ servile area
i own a house there and have being doing it up the last few months.
i will receive a inheritance in the next few months. and was looking at buying another 2 property and rent them out to locals, not a good income but a steady income. my main concern is what tax do i pay on income looking at around €600 a month. and where do i pay it. just want to retire early and over time buy more and do them up slowly and rent them out. any help is appreciated in advance
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Old Jul 7th 2017, 5:46 am
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Default Re: taxation worries

Firstly, are you a Spanish tax resident?
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Old Jul 7th 2017, 7:05 am
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Default Re: taxation worries

not yet , but not to sure what i will do . do not intend is going back
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Old Jul 7th 2017, 7:18 am
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Default Re: taxation worries

I can relate to the not going back bit. Inheritance / Property / Investments and the dreaded Taxation................ All things that have different aspects depending on where you are taxed / are tax resident. You need professional advice, no doubt of that. Inheritance Tax / Capital gains etc. etc. you need to tread carefully and get it right, for example TIMING of when you become Spanish tax resident may save you a bundle in IHT. (If its over a certain amount in Andalucía). Fred may be along to pick up some of your points, but for me I would seek advice before I did anything else.


Good luck to you.
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Old Jul 7th 2017, 7:41 am
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Default Re: taxation worries

thanks not an answer there but interesting to here your take on it just want to do things right thanks again

Originally Posted by lurchio
I can relate to the not going back bit. Inheritance / Property / Investments and the dreaded Taxation................ All things that have different aspects depending on where you are taxed / are tax resident. You need professional advice, no doubt of that. Inheritance Tax / Capital gains etc. etc. you need to tread carefully and get it right, for example TIMING of when you become Spanish tax resident may save you a bundle in IHT. (If its over a certain amount in Andalucía). Fred may be along to pick up some of your points, but for me I would seek advice before I did anything else.


Good luck to you.
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Old Jul 7th 2017, 7:47 am
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Default Re: taxation worries

I wouldn't even attempt to give a reliable answer to you, theres so many twists / turns / potential traps for you with what you have already said that I can only emplore you to consult a Professional tax expert in Spain, and do not do anything further with your cash (obviously not including your current property!!!!) until you have done that.
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Old Jul 7th 2017, 8:42 pm
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Default Re: taxation worries

Originally Posted by wicklowjack
hi was wondering if anyone can tell me about thr taxation on a rental property in Granada/ servile area
i own a house there and have being doing it up the last few months.
i will receive a inheritance in the next few months. and was looking at buying another 2 property and rent them out to locals, not a good income but a steady income. my main concern is what tax do i pay on income looking at around €600 a month. and where do i pay it. just want to retire early and over time buy more and do them up slowly and rent them out. any help is appreciated in advance
You need to submit a "Modelo 210" every quarter showing gross rent and allowable deductions - community fees, local taxes and similar . The tax charge is about 25% on the nett income.
The tax can be paid by bank transfer when the form is presented to the tax authorities

Last edited by Loafing Along; Jul 7th 2017 at 8:45 pm.
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Old Jul 7th 2017, 8:51 pm
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Default Re: taxation worries

Originally Posted by Loafing Along
You need to submit a "Modelo 210" every quarter showing gross rent and allowable deductions - community fees, local taxes and similar . The tax charge is about 25% on the nett income.
The tax can be paid by bank transfer when the form is presented to the tax authorities
The tax rate was 24% but was reduced to 19.5% and is now 19% for EU nationals, as a none resident you can claim less deductions than a resident
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Old Jul 7th 2017, 11:12 pm
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Default Re: taxation worries

Originally Posted by Longlegpete
as a none resident you can claim less deductions than a resident
Due to a recent change in the law non residents get exactly the same allowances as non residents, which includes the allowance of 60% of the net rental income (so long as it is not a short term holiday let)
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Old Jul 7th 2017, 11:24 pm
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Default Re: taxation worries

Originally Posted by wicklowjack
hi was wondering if anyone can tell me about thr taxation on a rental property in Granada/ servile area
i own a house there and have being doing it up the last few months.
i will receive a inheritance in the next few months. and was looking at buying another 2 property and rent them out to locals, not a good income but a steady income. my main concern is what tax do i pay on income looking at around €600 a month. and where do i pay it. just want to retire early and over time buy more and do them up slowly and rent them out. any help is appreciated in advance
As Lurchio has said, timing is critical. If you receive the inheritance while tax resident it will be liable for Spanish IHT. You become tax resident when you spend more than 183 days (not necessarily consecutive) in a calendar year. What you must note is that you are tax resident for the whole year in which you become tax resident. That is what makes the timing critical.

If you are not tax resident, you still pay tax on the rental income, but only on 40% of it as you seem to be proposing to let long term. As you are non resident you will not get any personal allowance. When you become tax resident, you will get the normal allowances, but you will also be taxed in Spain on ALL your income (some exceptions apply).
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Old Jul 8th 2017, 3:26 am
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Default Re: taxation worries

Originally Posted by Fred James
As Lurchio has said, timing is critical. If you receive the inheritance while tax resident it will be liable for Spanish IHT. You become tax resident when you spend more than 183 days (not necessarily consecutive) in a calendar year. What you must note is that you are tax resident for the whole year in which you become tax resident. That is what makes the timing critical.

If you are not tax resident, you still pay tax on the rental income, but only on 40% of it as you seem to be proposing to let long term. As you are non resident you will not get any personal allowance. When you become tax resident, you will get the normal allowances, but you will also be taxed in Spain on ALL your income (some exceptions apply).

thank you Fred i am living at home now but will move when the money is released . so negating the need to pay tax. i intend to live there and buy when there. hopefully i will just have to pay income tax on my earnings at 25% of rental monthly i do not intend to work just semi retire as such will do up the properties and that will be my work. so will be a resident and will register as such. just want to be up front with the Spanish government.
and not get aninexpectied investigations by the tax man there.
thanks for your reply
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