Rental Tax

Hi Lil McL

You could have a look in Davebev1’s guide to renting property in Spain (in Spain Tips and Guides, top of the page ). If it’s not there, you could contact him directly. There’s not much he doesn’t know about rentals in Spain 🤪🥂

Thanks so much. I have looked at that but I couldn’t see any reference to my particular query. I’ll look to see how I can message him directly but that seems a bit cheeky! 

He’s very helpful, as are most members. I doubt very much he would mind.

If you go to the top of the page and type “Davebev1” in the “what are you looking for” box, and “all forums” in the box at the side of it, you’ll see some threads he’s been involved in. You’ll be able to pick up a link to him there and PM him 🤪🥂

I have answered on a private message.

You will still need to complete the form, by populating all the relevant income/outcome boxes this will show any taxes due. You still need to submit the form to the authorities declaring any income, which you have received here via rent paid to you?

As an aside, don’t know if you have seen this?

https://www.thelocal.es/20201006/britons-who-let-out-properties-in-spain-to-see-taxes-triple-after-brexit

Agreed, just because the income is below the threshold for paying tax it does not mean you can ignore making a tax return, all income received must be declared even if it means a zero tax liability, better to keep on the right side of the tax agency. 

The article headline is a bit misleading, as headlines often are.  The tax is not tripling.  The current situation is that inside the EU/SM the tax rate is 19% after a few allowable deductions (not as generous as the UK allowances) but for those outside the EU/SM the rate is 24% on the gross income, ie no deductions.  This not 'new' news, it was known about before the referendum, it is another consequence of leaving the EU.  In fact I've been warning owners about this change pretty much since Mrs May insisted that the UK would be leaving the SM four years ago.  

But the headline is highly misleading, as for the tax to triple you would be paying the equivalent of only an average of only 8% of the gross rental in tax, and I don't think anyone would be able to legally claim enough expenses to bring it that low over the year.  In reality, after working with my fiscal rep on claiming as many allowable deductions as are legal, we currently pay around 13% on our gross rental income, that will increase to 24%, so not quite double, let alone triple.

I have answered the original question by private message in a little more detail but the answer is yes, a tax return does need to be done regardless of whether a profit was made or not.