Legal Holiday Lets

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Bugsbunny
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Legal Holiday Lets

Postby Bugsbunny » Wed Jan 05, 2011 12:24 pm

Hi there,

Last year I inherited an apartment in Torremolinos which has had a lot of money spent on it and is now available for rent. I only need to get enough money to pay the bills - not in it to make big bucks - although recouping some of the refurb outlay would be nice. If I wanted to advertise on a website, it is wise to 'go legal' do you think? Declare it for tax n stuff I mean. I hear the tax is hefty and just wondered what the general take on this was from you guys....

Thanks in advance,
Bugs :thumbup:

ashtondav
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Re: Legal Holiday Lets

Postby ashtondav » Wed Jan 05, 2011 1:45 pm

You should pay tax.

The Spanish forms are easy to download, complete and send to your bank for payment. You will get help here on the process if you ask. You should also declare the income/expenses in the UK on your SA form. Due to a double taxation agreement the UK will credit any tax paid in spain, and there will usually be no more to pay. It takes me about 15 minutes every 3 months to complete the tax returns for Spain.

Having said that if you are literally only going to rent it out to cover expenses I can see your point about possible hassle. And, of course, there will be no tax to pay anyway if your expenses exceed your rental income now Spain allows expenses to be deducted from gross rent to arrive at taxable rent.

If you are going to rent the place out to more than family and friends, and advertise it you should pay the tax, I think.

Of course you will be in a minority but then you'll never have to worried about the communal showers in a Malaga prison...

probe
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Re: Legal Holiday Lets

Postby probe » Wed Jan 05, 2011 2:44 pm

Hi Bugs,

I'm in a similar situation having a place near Malaga but living in the UK. Advice to me has been that the cross country laws allow for you to pay tax in one or the other country. So, I pay my non-residents tax each year for my place in Spain. This value is constituted in part by its rentable value and income I recieve through rental I declare in the UK using my self-assessment form.

It is usually possible to offset your expenses against the rental so that you have to pay little or no tax. However, you have to be careful of what is allowable as an expense. Expenses that exist for the house, whether you are renting or not, e.g. council tax etc can only have a proportion related to the amount of time that it is let for. If you rented your place for 12 weeks in the year then only 12/52 of this annual value would be counted as an expense. However, if you have somoeone in to do the cleaning each week that it is rented then this can be counted in its entirety. By the time we count the weeks that we are staying at our place i.e. "renting it", the expenses tend to balance any rental.

Cheers

probe

ashtondav
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Re: Legal Holiday Lets

Postby ashtondav » Wed Jan 05, 2011 4:48 pm

UK and Spanish tax law is very clear.

You have to declare, in Spain (form 215), any rental income received in spain. You also have to declare an imputed rent based on the time you occupy the apartment. This payable annually (form 210).

You also have to declare, in the UK, any rental income received in Spain.

In both cases you cna deduct certain expenses.

You most emphatically CANNOT only declare the rental income in the country of your choosing. If declaring it legally, you have to declare it in both countries. Using, in Spain, tax form 215 (I think) and in the UK the forieign income pages of the annual SA return.

Search tax, and forms 210 and 215 and you will find lots of info and advice that, speaking personally, has kept me both legal and low cost.

And remember because you paid tax at the time of purchase, the Spanish tax office is well aware that you own property in Spain as a non resident. And that as a non resident you are liable to rent it out.

probe
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Re: Legal Holiday Lets

Postby probe » Thu Jan 06, 2011 4:55 pm

Thanks for clarification ashtondav. I've asked my lawyers for further information. They have submitted form 210 for me in the past.

I'm not sure whether the fact that you may be paid for rental in the UK and not Spain has an impact on what you declare in Spain?

probe
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Re: Legal Holiday Lets

Postby probe » Thu Jan 06, 2011 4:56 pm

sorry forgot to add the link to Form 210:

http://www.agenciatributaria.es/AEAT/Co ... od210e.pdf

ashtondav
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Re: Legal Holiday Lets

Postby ashtondav » Sun Jan 09, 2011 12:22 pm

I'm not sure whether the fact that you may be paid for rental in the UK and not Spain has an impact on what you declare in Spain?


No impact at all.

It should ALL be declared in both countries,although because of the double taxation agreement you will probably only pay the tax in Spain.

probe
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Re: Legal Holiday Lets

Postby probe » Tue Jan 11, 2011 12:26 pm

The feedback that I have had from my Spanish Lawyers is that my non-residents tax is based upon the rentable value of our property and as any income I may receive for the place is paid in the UK then I only need to declare this in the UK i.e. I am in effect declaring a rental value already in Spain.

I guess all of our circumstances are slightly different and it is therefore sensible to get individual advice.

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Re: Legal Holiday Lets

Postby El Cid » Tue Jan 11, 2011 1:03 pm

probe wrote:The feedback that I have had from my Spanish Lawyers is that my non-residents tax is based upon the rentable value of our property and as any income I may receive for the place is paid in the UK then I only need to declare this in the UK i.e. I am in effect declaring a rental value already in Spain.

I guess all of our circumstances are slightly different and it is therefore sensible to get individual advice.


Once again the Spanish lawyers are giving incorrect advice. Why they can't leave tax to the tax experts and just get on being lawyers I will never understand!

What Ashtodave has said is 99%% correct - the only thing I would pick up on is that non resident imputed tax is paid for the period that it is not let - not just for the period that you occupy it.

Sid

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Re: Legal Holiday Lets

Postby beachbabe » Mon Jan 17, 2011 6:42 pm

Yes Ashtondav is correct with Sid's comment attached.

You are assuredly breaking the tax law of Spain if you are not declaring ALL rental income, whether it originates in UK, Singapore or Timbuktoo.

You are also breaking UK tax law if you are not declaring ALL rental income, whether it originates in UK, Singapore or Timbuktoo.

Change your advisor, or get some tax advice.

Or hope...

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Re: Legal Holiday Lets

Postby janda_grant2 » Mon Jan 17, 2011 7:49 pm

I'm now totally confused. I own a property in the UK which is rented out, and I was told I had to declare the income from this to the UK tax office, and would be liable for tax there. which I did under the non resident landlord tax thingy. So under the double taxation agreement do I also have to declare this amount in Spain - even though I have been told I MUST pay the tax in the UK?

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Re: Legal Holiday Lets

Postby Jool » Mon Jan 17, 2011 9:58 pm

I have quadruple checked this - I am resident in Spain, own a property in the UK that is permanently let out to one family on long term rolling renewable leases, no holiday tenancies

Income from everything earned in Spain is declared in Spain

Rental income on property in UK is declared in UK only

I checked and re-checked (with gestor NOT solicitor) and was told that I do not have to declare rental income in UK in spain as this is an exempt case, I pointed out I effectively get a double personal tax allowance in that case, and was told, yes, this is a legitimate exception.....I cannot find anyone who tells me different and I am sure others like Hilly have said the same thing on here too?

So now I am really confused too

ashtondav
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Re: Legal Holiday Lets

Postby ashtondav » Tue Jan 18, 2011 3:41 pm

I was replying to the OP.

Non resident in Spain, resident in UK with a property in Spain. Let out primarily to UK residents paying in the UK with sterling.

Spanish tax law insists all rental income is declared on form 210. Whether that income comes from UK or Spain.

UK tax law insists all rental income from a foreign apartment is declared on SA foreign pages. Whether that income comes from UK or Spain.

The double taxation agreement means you won't pay double tax. As non resident you also pay the imputed rental tax for those weeks when the apartment is not rented to third parties (form 215).

I do not know the law as it pertains to a Spanish tax resident who lets property in the UK, so will defer to better experts. I would be amazed, though, if you didn't have to declare worldwide income on your Spanish tax forms. Gestors do not understand international tax.

The tax authorities do!

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Re: Legal Holiday Lets

Postby esteponaman » Tue Feb 14, 2012 10:09 pm

Hi,

Could someone explain the process for declaring rental income on a property let out in Spain and the owner is a non resident.

I have read that a form 215 has to be completed and submitted every three months.
Does the tax due need to be paid at the same time or is it paid at the end of the year/
How is it paid if you are not in Spain?

I have also read that expenses can now be deducted from the rental income
The form 215 seems to just have space for totals of income and then tax due.

At what stage are the expenses deducted.?

Thanks for your help

Beachcomber
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Re: Legal Holiday Lets

Postby Beachcomber » Wed Feb 15, 2012 2:54 pm

Form 215 has been discontinued and this tax is now declared on form 210 and paid at the end of each quarter.

If you obtain a digital signature you can pay the tax online through your Spanish bank account from wherever you happen to be.

esteponaman
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Re: Legal Holiday Lets

Postby esteponaman » Wed Feb 15, 2012 6:44 pm

Thanks for that Beachcomber,

When are the letting expenses deducted ,?
As far as I know only the net profit is submitted on the form and then the tax is calculated.

At what point are the expenses deducted and are they submitted on the form?

Do you attach an account summary
Do you have to submit an annual return ?

Just a bit confused how the system works.

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Re: Legal Holiday Lets

Postby Beachcomber » Fri Feb 17, 2012 11:53 pm

I am not totally au fait with the quarterly declaration of actual rental as I do mine as a resident and I do not know anyone personally who declares for this tax but I would assume that the expenses go in box 7.

You do not need to submit any other paperwork but you need to keep it to hand in case you get an inspection.

You do not need to submit an annual return but if you have any weeks where the property is not rented you need to submit an annual notional tax return pro rata to the number of days it was not rented.

esteponaman
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Re: Legal Holiday Lets

Postby esteponaman » Sun Feb 19, 2012 10:45 pm

Beachcomber wrote:I am not totally au fait with the quarterly declaration of actual rental as I do mine as a resident and I do not know anyone personally who declares for this tax but I would assume that the expenses go in box 7.


Thanks for that information Beachcomber


I think a lot more people would be encouraged to declare their income as a result of the law change where non residents can claim for expenses and also if declaring there is no liabilty for the notional rental income

scottishtog
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Re: Legal Holiday Lets

Postby scottishtog » Thu Feb 23, 2012 4:43 pm

I hear the authorities are looking at Owners direct etc and checking which ones are legal and fining anyone that is not - go legal, well worth it in the end
www.house-spain.co.uk

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anis
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Re: Legal Holiday Lets

Postby anis » Fri Feb 24, 2012 11:54 am

We were told to put our licence numbers on the adverts.

It saves them double checking.
I carry them on our web sites too. It has a double aid in that it helps reassure would be guests that you are genuine and really exist - can only be good for everyone - guest and owners. Have never since been asked to verify our existence because of them.


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