Property in UK, Tax in Spain

Information and questions about the Law in Spain and Andalucia.
Unicorn
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Property in UK, Tax in Spain

Postby Unicorn » Fri Dec 07, 2018 11:22 am

Hi there

I am thinking about buying a small place in UK for rental. Does anyone know what tax is levied on it here in Spain - does the personal allowance apply?

Any other information that I don't know that I don't know would be helpful.

Cheers,
and Happy Immaculate Conception Day for mañana :wave: :wave: :wave: :wave: :wave: :wave: :wave: :wave:

El Cid
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Re: Property in UK, Tax in Spain

Postby El Cid » Fri Dec 07, 2018 11:45 am

The normal UK personal allowance applies in the UK and you will have to pay UK tax on the rental. You will also have to pay tax on the income in Spain, but any UK tax can be deducted from the Spanish tax.

If the property is not rented continuously, then for the period that it is empty, you will have to pay Spanish tax on the imputed rental value, just as you would if you had a second property in Spain. You will also need to declare it each year on Form 720.

Sid

Unicorn
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Re: Property in UK, Tax in Spain

Postby Unicorn » Fri Dec 07, 2018 3:01 pm

Thanks for that. It is an investment under 50k so I do not think it has to be declared on 720.

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Wicksey
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Re: Property in UK, Tax in Spain

Postby Wicksey » Fri Dec 07, 2018 3:27 pm

El Cid wrote:You will also need to declare it each year on Form 720.

Sid
Why do you have to declare it every year Sid? I thought you only had to do a new 720 if your investments changed by more than 20k?
Unicorn wrote:Thanks for that. It is an investment under 50k so I do not think it has to be declared on 720.
Where are you buying a property for under 50k Unicorn?

Unicorn
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Re: Property in UK, Tax in Spain

Postby Unicorn » Fri Dec 07, 2018 3:47 pm

I'll tell you when I have got it secure. It is a bloody good investment in my opinion!

elusive
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Re: Property in UK, Tax in Spain

Postby elusive » Fri Dec 07, 2018 4:17 pm

We rent out our home in the uk. Pretty simple. Declare the rental income on a self assesment hmrc form every year. And declare the rental imcome on our spanish tax return. We dont pay any tax in the uk on the uk house as its 50/50 owned and north of the watford gap!

casita-bonita
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Re: Property in UK, Tax in Spain

Postby casita-bonita » Fri Dec 07, 2018 6:19 pm

We rent out our property in the UK. As mentioned we have to declare the rental on UK and Spanish tax returns each year. However the property 50/50 between myself and the boss so the income is split and declared. You can deduct various costs like management fees, repairs, mortgage interest and so on. Once the numbers are crunched we are below the threshold for both the UK and Spain so have yet to pay any tax in either country.
Regards

Bob

El Cid
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Re: Property in UK, Tax in Spain

Postby El Cid » Fri Dec 07, 2018 6:40 pm

Wicksey wrote:

Why do you have to declare it every year Sid? I thought you only had to do a new 720 if your investments changed by more than 20k?
You're quite right.

Sid

Paddy Pumpkin
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Re: Property in UK, Tax in Spain

Postby Paddy Pumpkin » Fri Dec 07, 2018 10:37 pm

Unicorn wrote:Hi there

I am thinking about buying a small place in UK for rental. Does anyone know what tax is levied on it here in Spain - does the personal allowance apply?

Any other information that I don't know that I don't know would be helpful.

Cheers,
and Happy Immaculate Conception Day for mañana :wave: :wave: :wave: :wave: :wave: :wave: :wave: :wave:

The allowances on your rental income are very generous in Spain. You can deduct all your expenses and also a depreciation of the property. Then when you have the figure after expenses yiu will only pay tax on 40% of the income.

Example 15k income. 5 k expenses. So net 10k
You are only taxed on 4k (40% of 10k)

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Re: Property in UK, Tax in Spain

Postby Gasman » Mon Dec 10, 2018 12:05 pm

The UK tax on the rental property in the UK should also be noted with HRMC as under the Non-Resident in UK tax regime. This way you receive the income tax-not-paid (this is particularly important if you do the letting through an Agent so they can pay it direct gross to you), and we found that once you have done a self-assessment form the first time and it is seen as a low-income and not likely to put you over the tax-free personal allowance, you do not have to do it every year.
Should you become resident in the UK you have to notify them of the change, and similarly if you eventually sell the property, you have to let HMRC know that you are out of the scheme.
You have to declare it to Spain as part of your world-wide income, being resident of Spain but the first tax on the income is always liable in the country where the property is situated. Then as an income, Spain has the right to charge you any higher tax rate that may be due - and this is off-set against any tax you may have paid in the UK already on the property income.

casita-bonita
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Re: Property in UK, Tax in Spain

Postby casita-bonita » Mon Dec 10, 2018 12:18 pm

Forgot to mention notifying HMRC that you are not UK resident in order to get paid gross rental by the agent.

Don't bet on not having to fill a UK tax return every year. We have been here 10 years and despite being fully legit residents of Spain and under the UK tax threshold by a considerable margin we both have to fill in UK tax returns every year. Waste of my and their time but then who am I to question HMRC....
Regards

Bob


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