True or False? Tax on Rentals
May 28th 2011, 12:55 pm
#16
BE Enthusiast
Joined: Feb 2009
Posts: 483
Re: True or False? Tax on Rentals
Not sure.
However, you as the tenant are not liable for the tax.
The French "company" is, or the letting agent.
However, you as the tenant are not liable for the tax.
The French "company" is, or the letting agent.
May 28th 2011, 2:47 pm
#17
Joined: Jun 2006
Location: Granada Costa
Posts: 10,902
Re: True or False? Tax on Rentals
My house is owned by "a company" in France. I pay a letting agent in Spain cash every month and the money is passed on to them - My agent tells me that as the company who owns the house is in France and I am not Spanish, the Spanish rental contract and tax laws dont apply. Is that right?
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Income of any sort generated in Spain is taxed in Spain.
How the French company sorts it out with Hacienda and the French taxman is their problem.
May 29th 2011, 5:18 pm
#18
Forum Regular
Joined: May 2011
Posts: 135
Re: True or False? Tax on Rentals
Just out of interest, how much tax do you have to pay on any rental income?
We are considering buying in Spain and renting the property out for a few months a year to help with the up keep, so it would be useful to know! Thanks
We are considering buying in Spain and renting the property out for a few months a year to help with the up keep, so it would be useful to know! Thanks
May 29th 2011, 5:29 pm
#19
Joined: Jun 2006
Location: Granada Costa
Posts: 10,902
Re: True or False? Tax on Rentals
May 30th 2011, 6:12 am
#22
Joined: Jun 2006
Location: Granada Costa
Posts: 10,902
Re: True or False? Tax on Rentals
The rental income is also taxable in the UK if you are UK tax resident but any Spanish tax paid can be deducted from any UK tax due.
Bearing in mind that UK tax rules are more generous with regard to allowances and deductions from the rental, in most cases no UK tax would be due. However in the case of UK higher rate taxpayers that could be different.
Resident landlords only pay tax on 50% of the net income and are allowed many deductions. The 50% rule was recently introduced to stimulate the long term rental market.
Back to the original question about the tenant paying the tax, apparently this is correct but in practice this tends to apply to long term rentals. The tax on shorter holiday lets is usually sorted out by the owner or the agent.
I did also read that if the non residents property is registered as a proper tourist let then some deductions may be allowed. However I don't know the details of how this would work in practice or what you have to do to get such registration.
May 30th 2011, 9:56 am
#23
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Joined: Feb 2009
Posts: 483
Re: True or False? Tax on Rentals
You are now allowed deductions, actually.
So if apartment rented out for 26 weeks of the year, for example, 50% of the community fees could be deducted from gross rent.
This from property tax international:
So if apartment rented out for 26 weeks of the year, for example, 50% of the community fees could be deducted from gross rent.
This from property tax international:
Spanish Rental Income Tax – a recent ruling by the European Court of Justice forced Spain to change how non-residents were taxed on rental income which came into effect on the 1st of January 2010. Prior to 2010, non-residents were taxed at 24% on their gross income without any allowable deductions. The new ruling allows EU residents to deduct allowable expenses when calculating taxable income.
The new system requires a quarterly income tax return to be submitted by the 20th day the month following each calendar quarter e.g. April 20th, July 20th, October 20th and January 20th. An annual balancing return is no longer required.
Under Spanish legislation a tax is levied on unoccupied or lifestyle properties. Deemed Rental Income is charged at 24% - calculated at either 1.1% or 2% of the property’s rateable value. The Spanish deemed rental income tax return must be filed by the 31st December each year.
The new system requires a quarterly income tax return to be submitted by the 20th day the month following each calendar quarter e.g. April 20th, July 20th, October 20th and January 20th. An annual balancing return is no longer required.
Under Spanish legislation a tax is levied on unoccupied or lifestyle properties. Deemed Rental Income is charged at 24% - calculated at either 1.1% or 2% of the property’s rateable value. The Spanish deemed rental income tax return must be filed by the 31st December each year.
Last edited by frigilianafreddy; May 30th 2011 at 9:58 am.
May 30th 2011, 11:03 am
#24
Joined: Jun 2006
Location: Granada Costa
Posts: 10,902
Re: True or False? Tax on Rentals
Thanks for picking up on that Freddy - I had not come across that change.
What is not clear is exactly what deductions are allowed. They have to be directly related to the rental income, so I guess community tax would be allowed but so far, I haven't been able to find out just what is allowed - very little I guess
I will have a dig around and see what I can find.
What is not clear is exactly what deductions are allowed. They have to be directly related to the rental income, so I guess community tax would be allowed but so far, I haven't been able to find out just what is allowed - very little I guess
I will have a dig around and see what I can find.
May 30th 2011, 2:11 pm
#25
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Joined: Sep 2007
Location: Ontinyent - Valencia region (campo)
Posts: 5,160
Re: True or False? Tax on Rentals
Thanks for picking up on that Freddy - I had not come across that change.
What is not clear is exactly what deductions are allowed. They have to be directly related to the rental income, so I guess community tax would be allowed but so far, I haven't been able to find out just what is allowed - very little I guess
I will have a dig around and see what I can find.
What is not clear is exactly what deductions are allowed. They have to be directly related to the rental income, so I guess community tax would be allowed but so far, I haven't been able to find out just what is allowed - very little I guess
I will have a dig around and see what I can find.
What about agency fees and perhaps, even, IBI?
My gestor certainly allows these for me but then I'm resident.
May 30th 2011, 4:59 pm
#26
Joined: Jun 2006
Location: Granada Costa
Posts: 10,902
Re: True or False? Tax on Rentals
Since tax declarations in Spain are by self assessment I guess that you just deduct what you think is appropriate and just submit the net figure.
Just like with income tax, 95% of the time this will be accepted but there is always the risk that a future tax investigation could make you have to justify any deductions.
Frankly, I think that Hacienda are more than happy to see some tax being paid for a change and are not so likely to quibble about the exact amount.
They are after the people who declare nothing!
