Posts tagged with "rental"

Non Resident Taxation Explained

Non-Resident Home Owners and Annual Property Taxes

Most non-resident owners of property in Spain are under the misconception that they do not need to submitt their annual tax forms anymore!

It would be great but it is not the case. However as from 1st Jan 2008, the law changed and the taxes payable are less than people paid in previous years.

Up until the end of 2007 non-residents with property in Spain were liable to pay a “wealth tax” (Patrimonio) which was calculated on the value of their assets in Spain.

It is interesting to note that when Prime Minister Zapatero fulfilled his election promise regarding Patrimonio or “Wealth Tax”, with the introduction of Spanish Law 4/2008 passed on the 23 December 2008, the tax was finally amended by reducing the taxable base to zero.

Is this technically a formal abolition of the Tax? The answer is no. Certainly the effect is that no wealth tax will be paid by either residents, (obligación personal) or non-residents, (obligación real).

The law, which ironically was published in the Spanish Government Official Gazette (BOE) on Christmas Day 2008, applies to tax years starting 1st January 2008 onwards which, under the previous scheme would have been payable in arrears in 2009.

The mechanics of the new law mean that the obligation to submit a wealth tax return (Modelo 214) is terminated by applying a 100 per cent deduction to the taxable base.
By reducing the tax to zero but not abolishing it, is the Spanish Government retaining the option to re-introduce the tax in the future? That may well be the case!

So to reiterate, the Patrimony “wealth tax” has to all intents and purposes been done away with. But that does not mean that there are no annual property taxes for Non-Residents to pay. You may remember noticing on previous year’s Modelo 214 forms that there were 2 separate calculations: The Patrimony amount and the “Declaración de la Renta” amount.

The “Declaración de la Renta" or “Non Resident’s annual tax return” must still be made and paid!

Taxation, and particularly dual taxation issues are an extremely complicated subject and I would always advise readers who make financial gain from their property in Spain to get a qualified assessment of their own personal circumstances, either directly from the Spanish “Hacienda”, Spain’s Inland Revenue, or from a tax professional.

However, in general terms the earnings from rented property or sub-let property are calculated on 24 per cent of the gross income received from the tenant, excluding IGIC.
If the property is only rented out for part of the year, the earnings are calculated as above for the rented period. For the part of the year that it lies empty, the calculation is made as for “Deemed Rental Income”: see below.
See if your Catastral Value has been updated since 1994 if the answer is yes the coefficient to use is 1.1 if the answer is no then use 2.Multiply the Catastral Value by 1.1 or 2 (as above) per cent Take this value and multiply by 24 per cent – thats how much deemed rental income tax you pay.

Example: Catastral Value 150,000 revised since 1994 = yesx1.1 % = 1650x 24% = 396 euros tax payable
If your property is left empty, even though you do not let out your holiday home for gain, Spanish law assumes you have what is called a “Deemed Rental Income” which is subject to non-resident Income Tax.

The “Deemed Rental Income”, which used to be included on the old Modelo 214 form, is now declared on a Modelo 210 form.
The amount you pay is calculated using the “Valor Catastral” (Rateable Value) of your property in Spain. This can be easily ascertained by looking at the receipt for your “Impuestos Sobre Bienes Inmuebles” or IBI, (often referred to by English speakers as “Rates”) – which is paid to your “Ayuntamiento” annually.
This receipt will also tell you whether the rateable value of your property has been revised since 1st January 1994. This is critical because the percentage used to calculate “Deemed Rental Income” is higher if your rateable value has not been revised since that date. Tax payable on the “Deemed Rental Income” is 24 per cent. The deadline for the submission of form Modelo 210 is the June 30th 2009 for income deemed or actually derived in 2008.
All of the above applies to Non-residents with no permanent establishment but who own a holiday home in Spain
An example of a receipt for “Impuestos Sobre Bienes Inmuebles” or IBI: The format can vary between Ayuntamientos, or whether you get the receipt from your bank rather than paying in cash. But all the information you need will be on there.

Anyone treating apartment letting as a business
If someone owns property in Spain, but is not resident in Spain for tax purposes and has at least one office or premises used for managing the letting business and employs one or more people on a full time contract, then the owner is considered to have income through a permanent establishment in Spain and is subject to different regulations.

It is important that non-resident homeowners are aware of their legal obligation to submit an annual income tax declaration in Spain. What holds true for all, is that no non-resident home owner, whatever their circumstances, are exempt from making a non-residents Income Tax return.

You probably know someone who has owned property for years and never made a declaration? However, if they are caught, and computerised records are making that ever more likely, they are liable to pay the last four year’s tax and probably a hefty fine.

But in any case, when that property is eventually sold or passed on as part of an inheritance, the Spanish Tax Agency can and will check their records, which will show that the property is owned by a non-resident and that no tax declarations have been received. The taxes will then need to be paid, including any fines imposed, before the property can be legally transferred.

I believe that at the very least it makes sense to clarify what your tax liability is and if at all possible, keep things up to date, rather than looking over you shoulder and waiting for a fine to drop on the mat.
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Posted by on 07/22/2009 08:56:00

Country Breaks on the Costa Blanca

For anyone living in the Costa Blanca, a week away in the mountains is a delightful change.

Two such properties are the Casas Rurales in Benimeli, Alicante. The first one, “El Sequer” is a charming self-catering holiday cottage for four persons, nestled amongst orange groves on the outskirts of the small village of Benimeli, a small typical Spanish village between the Segaria mountains and the Jalon valley.

It is only 10 kilometres from the beaches between Denia and Oliva and 6 kilometres from the A-7 motorway exit and half way between Valencia and Alicante. It is the perfect starting point for visiting other inland areas, and the rest of the Valencian Community.

El Sequer is a farmhouse, beautifully restored and has two double bedrooms, one with full bathroom with whirlpool bath, spacious and cosy living-dining area with fireplace. Fully equipped kitchen, outside porch with panoramic valley and mountain views. Secluded garden with private swimming pool, barbeque area and fruit orchard.

The second property “Xaymaca” is a 19thC Spanish house, beautifully restored for self catering for four to eight people, also located in Benimeli. It has four double bedrooms, each with en-suite bathroom, two spacious living rooms with wood burning stoves, one dining room for 8 people, fully equipped, rustic style kitchen. There is an open courtyard with fountain and plants for alfresco meals, garden with large private swimming pool, covered porch, barbeque, fruit orchard, mountain views.

For further details, telephone 96 642 40 56 or 626 200017 .

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Posted by on 06/04/2008 16:13:00

Moraira Apartment Rental

Moraira Luxury Air Conditioned Town Centre Apartment Sleeps 6

• 50m walk to bars and restaurants

• 500m walk to beach

• Secure underground parking, however car not essential

• Access via lift or stairs; disabled access

• Large swimming pool and sun terrace

• 3 double bedrooms

• 2 bathrooms

• Spacious lounge /diner

• Fully equipped kitchen including dishwasher and washer dryer


Low season: £300 per week Mid season: £550 per week Peak season: £700 per week

Please Enquire

Telephone: 0034 96 649 2515

Mid week bookings welcome. Saturday changeover during peak season.

Deals for property hunters!

Lounge Kitchen

Lounge Kitchen

Rooftop Pool

Rooftop Pool



Dining Table

Dining Table

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Posted by on 01/09/2008 18:38:00