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I am currently considering my options in regards to buying a house in Spain. Ultimately I would like to retire to Spain and live there permanently but am considering whether it would be a good idea to keep a property in the UK and rent it out. What are the tax implications of doing this both in the UK and Spain?
You will have to declare the rental income for tax purposes in UK first. You then declare the rental income on your annual Spanish tax return and the tax you have paid in UK will be taken into account. As a resident, you can claim expenses and it will be taxed at the same rate as income starting from 19%.
If you sell the property in UK after becoming a tax resident in Spain, you will be liable to capital gains tax in UK as a second or buy to let home and you will also be liable to Spanish capital gains tax, again taking into account any tax you have paid in UK. Due to the escalation of house prices in UK this CGT could work out very expensive.
Posted: Sun Feb 16, 2025 9:34am
marcliff wrote on Sun Feb 16, 2025 9:28am:
You will have to declare the rental income for tax purposes in UK first. You then declare the rental income on your annual Spanish tax return and the tax you have paid in UK will be taken into account. As a resident, you can claim expenses and it will be taxed at the same rate as income starting ...
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...from 19%.
If you sell the property in UK after becoming a tax resident in Spain, you will be liable to capital gains tax in UK as a second or buy to let home and you will also be liable to Spanish capital gains tax, again taking into account any tax you have paid in UK. Due to the escalation of house prices in UK this CGT could work out very expensive.
So does that mean if I sold my UK property after becoming a Spanish tax resident I would be liable for taxes in both countries?
Dotty64 wrote on Sun Feb 16, 2025 9:34am:
So does that mean if I sold my UK property after becoming a Spanish tax resident I would be liable for taxes in both countries?
Yes. But any tax you pay in UK, the first port of call by tax people, will offset the amount you will be charged in Spain. Once you become a tax resident in Spain you will be liable to tax on all your world wide income. You will also have to complete a form 720 which is a declaration of foreign assets and includes property valued at over €50,000. If the price goes up over €20,000 in one year you will have to complete another 720.
You are not taxed on the value of those assets but you are taxed on any income derived from them such as rent.
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