ADVICE RE RENTING IN MURCIA/BOLNUEVO AREA FOR 6-12 MONTHS

Hi Everyone,

My husband and I have finally found an area that we would like to relocate to. We are hoping to rent from Oct 2014- March 2015, with a view to extending it. I have done a lot of research but would like some advice as I'm not sure that I have understood things correctly. 

1. We are bringing our own uk registered car. It will be MOT'd just before we come over.We will inform our insurance provider that we are coming to Spain. Can we legally drive in Spain for 6 months without having to change plates or register car in Spain and how does this change if we are there for more than 6 months? Do we have to inform any Spanish authorities that we are using a uk registered car in Spain if we only stay for 6 months?

2. We are keeping our flat in Glasgow but not renting it out, my son will be staying in it. Would this be taken into account for the purposes of the new rule re. tax on foreign assetts and would we be expected to pay tax in Spain on the value of our flat in Glasgow?

Ideally I would rent in Spain for a few years , come home to sell flat, then go back out with the intention of buying but I am beginning to wonder if spending more than 6 months at a time within the next few years is worth the paperwork etc involved.

Thanks in advance, advice is very much appreciated.

PS. Inheritance tax in Murcia is so unfair and transfer tax is ridiculously expensive compared to the UK but I am trying to accept that if I choose to move there then I have to accept it, after all no one is forcing me to live in Spain. But I can understand people feeling bitter about it.

1.Yes, you can bring the car over and use it for up to 6 months. Check with your insurers if you can be covered for 6 months as some have a limit of 3 months. If staying over 6 months it will need to be put on Spanish plates. You will also have to register as well as non fiscal-resident of the EU until you stay over 6 months when you have to become tax residents.

2. Their is no tax on foreign assets. If you stay non-resident you do nothing. If you stay longer than 6 months then you simply declare the value of over 50 thousand euros. The only tax you would pay is if you make a profit from it which you won't be. The only other tax would be if you bought in Spain then sold in UK it would no longer be your main home. If you sell, do it before moving over then no taxes. Even if you keep the flat you wouldn't pay tax just because of its value.

If the inheritance tax is a worry, look outside Murcia where it isn't a problem.

Hi Boboal, Thanks for reply. When you say pay taxes on foreign assets if I make a profit do you mean if I had assets in the form of shares etc then I would be taxed on the dividends, but I would not be taxed on an increase in the value of my flat in Glasgow? Sorry for being so dumb!

My best advice is don't stay in Spain longer than 183 days in any year. Stay a none resident and don't buy a property. Rent long term and leave it empty when you are not there. Stay a UK resident on extended holidays.

That way you legally avoid all the tax grief, community charges, council tax, tax to buy, Form 720, and costs of changing your car, changing the utility contracts and all the rest of the problems related to Spanish property. If you find you have bad neighbours for instance you can simply up and move..

In the Spanish summer its very hot, very busy and unpleasant. In the winter its warm, quiet and everyone running a business is pleased to see you.

For me it's a no brainer but then I know owning property is deeply engrained in the British culture.

 Mickyfinn,I agree with you completely. My problem is that I despise the weather in Scotland. Winter is horrible and summer is short and unreliable. I wish I could bring myself to spend the winter in Spain and come back to Glasgow for the summer because I know it makes sense. Also my husband works offshore so feels that he wants to be settled in one country. He will put up with us spending a few years making our mind up but he then wants to be living somewhere permanently. I think he spends so much time in airports for work that he just wants to relax and feel that he has a proper home somewhere.

We have spent a lot of time in Spain, and tried not to live in holday mode, but I realise until we live there for 6 months or more we wont understand the reality of living a normal, every day life in a different culture. All of the hassles you mention do scare me but Glaswegian weather scares me more! 

I sympahise the UK climate is worth escaping, hence so many Brits living in Spain and putting up with the negatives.

However in the end all ends up being what financially makes sense to you personally because everyones position is different. If you are asset rich Spain is not the place to become a fiscal resident.

So many in recent times have now changed their status for that very reason. The EU regulations on cross border wealth make it very difficult to avoid if you become a resident property owner. Renting keeps you under the radar. I don't suggest you do anything illegal here simply a legal method of enjoying the best Spain has to offer without the financial pain.

Firstly your flat in Glasgow. No, you will not be taxed on it if you don't sell it. The asset declaration does not mean you pay tax on those assets. Now, most EU countries have the same rule regards asset declaration. Only France actually charges you tax on their value. The only time you would pay tax would be if you bought a house to live in in Spain and then sold the flat in Glasgow as it is not your main home. Therefore the advice to sell it before you buy in Spain. 

Yes, you pay tax on dividends as you do anywhere. If tax is already taken out in UK then that is offset against your Spanish tax bill. Same as savings accounts or bonds. 

Now, I disagree quite a lot with mickyfinn. How can you avoid the council tax? It would mean paying council tax in Scotland and non-resident income tax in Spain. I don't know how much council tax in Glasgow is but mine just went up to £200 a month (10 months so £2000) My council tax here is €202 a year and, even adding the €548 a year community charges means a difference of €1400 a year in my favour.

What tax grief? I simply pay my solicitor 130 euro a year and they handle all my business including the tax return. So far, no tax to pay. The asset declaration was a one off and, if nothing changes, nothing else is done. No charges, no taxes, no fees.

I wouldn't advise anyone to bring over a UK car. Prices here for lower aged cars are comparable with UK. It's only when you go for an old one that prices in UK are cheaper. Even so, both my neighbours rematriculated their UK cars and it was done pretty smoothly. I drove over in my old UK car then took it home and gave it to my son-in-law. Bought a new car here no problems at all.

Why problems changing utility contracts? When you buy a property that is done by the solicitor. Simply a matter of the solicitor changing the bank details. 

I also disagree with the In the Spanish summer its very hot, very busy and unpleasant.

Of course it's hot - and it's great, thank you. One of the main reasons for living here. Even at it's peak, our local shopping malls are nowhere as busy as a UK one. Been into a UK city centre on a Saturday recently? And I don't find it unpleasant at all. I suppose it depends where you choose to live and what your outlook on life is. I may also be lucky living in an all year round town which is, yes, quiet (ish) in the Winter but always as full and busy as you want. 

Now I may, of course, be getting it all wrong. Maybe I'm not really enjoying myself living here but I don't care. I do enjoy it, I don't seem to have any of the problems the Whinge About Spain posters have, I have done everything totally legally including house, driving licence, car, residency, healthcare and so on. 

For me the no-brainer would be constantly shuffling back and forth to UK and keeping an eye on the calendar to make sure I don't overstay. Having different lots of furniture, moving personal belongings back and forth or not having them in one place for half the year. 

The only thing I can say is that on my brief trips to UK, I can't wait to get back to what I now class as my home. As a point of interest, we have been here for 13 years and have lived here permanently for the last 3 of those. 

About the only thing I agree with is the renting. Do that for 6 months, preferably a couple of months in different places. If you then want to keep paying more than a mortgage would cost then carry on doing so as it does give you freedom of movement. Personally, I'm on my third property here. First one a disaster, second one fair to middling and this one is where I'm going to spend the rest of my days. 

My council tax is also £200 per month. Though I did read an article recently suggesting that perhaps the Spanish govt should lower transfer tax and increase the Spanish equivalent of council tax. I do find the idea of paying, for example , £14k transfer tax on a purchase price of £200k hard to stomach. If I bought for under 250k in the uk I would not pay stamp duty. So , yes I may save £1500 in taxes in Spain but it would take me 9 years to break even taking into account the tranfer tax I paid right at the beginning. Just a different perspective on the idea of how much you are better off in Spain because of a reduction in council taxes.

 I know that It would be a sensible option not to move lock, stock and barrell to Spain but I am so drawn to the lifestyle that I hope that I will end up as happy as bobaol. I just want to go into it with my eyes open, so that I don't move there and then moan about everything that I should have found out about beforehand. That is why I am so keen to hear from people who have walked the walk.

A none resident tenant is not legally obliged to pay either council tax, community charges or none resident taxes. The property owner is.

Life style issues are personal preference.

I know that I wont be paying any of these charges until I purchase a property, I'm hoping that transfer tax might be reduced by then, though I doubt it.

Firstly your flat in Glasgow. No, you will not be taxed on it if you don't sell it. The asset declaration does not mean you pay tax on those assets. Now, most EU countries have the same rule regards asset declaration. Only France actually charges you tax on their value. The only time you would pay tax would be if you bought a house to live in in Spain and then sold the flat in Glasgow as it is not your main home. Therefore the advice to sell it before you buy in Spain. 

Bobaol - if she sells her flat before she moves to Spain, then spends more than183 days inSpain, therefore becoming that resident for the whole year( tax year Jan-Dec) she will pay cgt on it inSpain, though it will be less if the proceeds or part of them are spent on buying a new house within 2 years.

Therefore timing of the move to Spain is significant.just read you're  moving in Oct, so that's ok.

Even if you are not renting the flat out, you will be charged imputed income tax on it by Spain ie: on the rent the tax office assumes you would get if it were rented out.

So if I spend more than 6 months in Spain, become a tax reident but continue renting then I will be charged tax on my rental income on my flat in Glasgow(which I wouldn't even be earning as my son would be living there)?

How do they decide how much this tax would be and if I am renting in Spain as a non resident why are they entitled to take anything from me with regards to my flat in Glasgow. 

I am trying to persuade my husband to keep our flat in Glasgow and rent in Spain for a few years before committing to buying, The costs involved in this seem to be increasing every time I get more information. He would prefer to buy in Spain within the next year. I would rather wait until our Glasgow property increased in value a little and prices in Bolnuevo area decreased. I was told by an estate agent that sellers in that area are being particularly stubborn about accepting the reality of the value of their houses and are still relying on the opening of Corvera Airport and Paramount as selling points that will get them higher selling prices. 

For the benefit of the people who live there it would be fantastic if these projects were successful but I'm not sure they will ever happen.

I think they have a formula they use.

I 'm afraid Spain does what it likes!

Although the assets declaration is not a tax it will come in as a handy check list for I HT, or if they decide to lower the present threshold for wealth tax.

also it is important  to take into account about the zero regional allowance for IHT, so perhaps professional advice on that?

I think Murcia has shot itself in the foot with its IHT levels. I am still unsure about whether or not it will put me off buying in that area. If I spend 6 months there and love it then I will accept it but I can understand why people would buy in another part of Spain to avoid it

.I am intending to take out a life ins policy to cover this if either my husband or I die. It must be a nightmare to be left owing it and not being able to sell to pay, I think it's quite a cruel tax and must cause a lot of distress. And then my kids would be taxed on it again when I die. Does seem really unfair, but at least I would be aware of it before making Spain my home.. Must have been a shock for people who have been there for years.

Well, I would suggest don't do it. If the tax levels and the hassle are worrying you now then think what it would be like in a couple of years.

Bringing over a UK car, worrying about transfer taxes, worrying about IHT rates and so on. Just not the sort of thing you want when moving to a new country.

The good thing is that property prices have reduced so much. The money you will save on whatever property taxes you will pay will more than compensate for that. A property advertised for 200 grand will accept a reduction of 8% or whatever to take into account the tax. For example, a house near me for 147,000 took 135,000.

If you are not committed, don't do it.

Thanks Bobaol,

I have probably not expressed myself too well. I guess I am trying to do the worrying now and want accurate info about all of these things so that when I am living in Spain I won't be worried or stressed because I have considered all the implications of relocating. I keep reading things online by expats saying if only I'd known this , that and the next thing they wouldn't have left the UK.

I don't want to be a moaning ex pat , blaming Spain for everything because I didn't do my homework. 

Murcia is not the most attractive region of Spain. It’s very arid, suffers continual drought and has huge areas of industrial agriculture, much under plastic Traditionally it’s also a very poor province although that’s changing slowly. However the recession has knocked it backwards economically.

Property is cheap there at the moment but there are very good reasons for that. Massive over build in the boom being one of them and high unemployment among the population of Spanish.

I advise you to come to the region first and rent for at least 6 months, and don’t even think about buying property. There is no hurry; property in Murcia is staying cheap for a long time despite what sellers will tell you.. Get the permanent holiday mode out of your system first and then perhaps you will be more objective about living full time there. If you do that you will understand better all the implications.

Despite what many people say living permanently in Spain is not necessarily a route to everlasting happiness. Many expats live in denial because they have little choice but to make the best of it. That said many do enjoy their life style in Spain, it depends entirely on the individual. Try before you buy is the most sensible of options many wish they had taken.

We have been over s few times and I do agree , the greenery further up the coast is much nicer but I really want a mild, dry winter so short of going to the Canaries I think it's the best area for us. We are going over to do a housesit in July, then again in Aug to look at rental properties, then hopefully eventuall rent from Sept/Oct.

My husband really liked Camposol, and I did think it was much nicer than the bad publicity suggests. I thought it was let down a bit by the commercial areas. I would also like to be closer to a beach. 

It's interesting that when you say to someone that you are moving to Spain they think you will be getting a massive house for peanuts. Yes , houses are cheaper than before, but only beacuse they were ridiculously overpriced. In Bolnuevo, most 3/4 bed houses are priced at over 320k. I don't consider that peanuts. And if one more estate agent tells me that a house is a bargain because it's less than it was when it was in 2007 I will scream. It's not a bargain now, it's realistically priced.

You seem pretty clued up Eileen. Good luck.

Thanks to everyone for the advice, it has really helped.