Taxes for non-resident landlords. Help please

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Superplonk
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Taxes for non-resident landlords. Help please

Postby Superplonk » Thu Sep 11, 2014 6:13 pm

Apologies if this is going over old ground, but everything I've seen refers to tourist lettings only. I'm trying to advise a British non-resident owner of a house in Spain who wishes to find longterm tenants. Does he need to submit a quarterly declaration or is that just for holiday homes? We've also been unable to establish whether rent is tax deductible against mortgage interest (and if so, to what extent) if the owner lives abroad.
I'm betting that the bill and the paperwork will be too much.
Thanks.
Last edited by Superplonk on Fri Sep 12, 2014 12:02 pm, edited 1 time in total.

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chrissiehope
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Re: Taxes for non-resident landlords. Help please

Postby chrissiehope » Thu Sep 11, 2014 11:07 pm

Sorry, I don't know the answers to your questions, but from what I've read over the past few years, I would advise your friend to think very carefully & take proper legal advice before committing himself to long term rentals. As I understand it, it can be a case of 'once in, never out' - landlords in Spain seem to have very little protection :thumbdown:
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Re: Taxes for non-resident landlords. Help please

Postby Superplonk » Fri Sep 12, 2014 12:00 pm

Well he shouldn't be worried about that because I'm the possible tenant and I'm as pure as the driven snow. I just want to be sure that all parties know what they are getting into.

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chrissiehope
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Re: Taxes for non-resident landlords. Help please

Postby chrissiehope » Fri Sep 12, 2014 1:06 pm

Ah, didn't realise that - in that case I hope you get answers soon :D :thumbup:
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gus
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Re: Taxes for non-resident landlords. Help please

Postby gus » Fri Sep 12, 2014 10:19 pm

Presumably he is aware that he will have to declare the income in the UK where he will be liable to Income Tax?

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Re: Taxes for non-resident landlords. Help please

Postby Beachcomber » Fri Sep 12, 2014 11:06 pm

Mortgage repayments are not deductible from non-resident tax income. Deductions against tax are very restricted and are mostly limited to services like water and electricity but on a long let it is usual for the tenant to have these put into his own name and pay them directly.

Then there is the new law on rentals which is very draconian and difficult to comply with.

Are you sure you are not just a friend whom he is allowing to live in the property for a period of time in return for looking after the garden and keeping the place up together? :wink:
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Re: Taxes for non-resident landlords. Help please

Postby Superplonk » Sat Sep 13, 2014 9:17 am

I wish I were being offered a free house in exchange for some light gardening duties. It looks like the whole arrangement is now rather unattractive from the landlord's point of view. I was already going to have to discuss the need to declare in both countries, but the non-deductibility part might be too much for him. I presume that double taxation rules would give some reduction in liability.
I found this :http://www.agenciatributaria.es/AEAT/Co ... ingles.pdf
as a summary of what's what. However, it is undated and I don't know if anything here has changed. Is this another one of those cases where Spain will eventually be punished for discriminating against non-residents?

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Re: Taxes for non-resident landlords. Help please

Postby Superplonk » Sat Sep 13, 2014 9:29 am

I've just found this :
When taxpayers are resident in another European Union member state, the expenses
described in the Law on Personal Income Tax can be deducted when calculating the
taxable base, provided that the taxpayer provides proof that these expenses are
directly related to income earned in Spain and have a direct economic connection that
is inseparable from the activity carried out in Spain.

That comes from Agencia Tributaria documents listed as references on the Wikipedia Taxes in Spain article.
What expenses would they be?

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Re: Taxes for non-resident landlords. Help please

Postby katy » Sat Sep 13, 2014 10:42 am

Beachcomber wrote:
Are you sure you are not just a friend whom he is allowing to live in the property for a period of time in return for looking after the garden and keeping the place up together? :wink:
What 99% of non-residents do, why complicate things :wink: :wink:

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Re: Taxes for non-resident landlords. Help please

Postby costakid » Sat Sep 13, 2014 10:53 am

Beach is trying to say this is what you could say and have a deal on the side. May suit all concerned.

Superplonk
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Re: Taxes for non-resident landlords. Help please

Postby Superplonk » Sat Sep 13, 2014 11:13 am

I'm a bit slow this morning. Am now following. :lolno: Trouble is that my own tax return requires me to say where I live, who owns it and how much rent I pay. Someone, somewhere gets in trouble.


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