This is a taxing subject

Hi,

   If you could send me the form (214 I think) I would be very grateful indeed.  I have read various messages now on tax and if I am honest it sounds rather complicated, well certainly more than I thought it would be.  I have recently bought a property on Polaris resort Hacienda Riquelme.  Exactly what taxes will I be liable for when I sign for the property in approx. March/April??

If you can help I would be grateful and will check for replies!!

Thanks

Hi Apollo

If you send me a PM with your e-mail address, I will send you the information document.

Please note, I am not an expert, purely an owner who didn't want to pay someone to pay my taxes! It's worked for me for the last 2 years, so I must be doing it right!

As for taxes you will be liable for once you become an owner, as I say, I am not an expert but the taxes we pay as a Non-resident are:

1. IBI tax - same as Council Tax in the UK but heaps cheaper

2. Wealth Tax - See my document.....

3. Renta - See my document.......

Hi FibbyUK,

Thanks you all your help and all the posts.

What you have said about the mortgage offseting the tax only applies when it is a spanish mortgage only, would you agree?

Can you use a UK mortgage to offset the tax?

In the rental income tax return form can you put down on the tax form the amount the rental company pays out (as your income) even if they have taken from this the costs of commission and advertising etc before it appears in your bank account?

Thanks
Hollybrook

Hi Hollybrook anything Spain stays in Spain. Thus the only way wealth tax can be offset is by having the mortgage secured on the Spanish property thus it has to be with a lender in Spain. Your mortgage in the UK (presumably funds you have released on your UK  home) is outside of Spanish jurisdiction and fiscal law so do not qualify.

In theory if you are doing everything by the book and declaring all rental income then costs can be offset against income declared. However any IVA incurred cannot be claimed back against income unless you are registered for IVA.

Should you sell the property at some stage in the future and you have incurred expenses that have been subject to IVA (bathroom refits etc) as long as you have kept invoices these costs can be offset against Capital Gains Tax.

Hope this helps

Rgds 

Hi Hollybrook,

I would take Smiley's advice below. I am just an owner like you, definitely no expert.

I am not sure about what to put for the Renta on the 214 form as we don't rent ours out, so have no income, I never fill this part in.

Personally, I would put the lower figure, surely then you pay less tax?

Sometimes ignorance is bliss........!!

I am sure the tax office can't possibly check up on every rental income submitted? They would have their hands full. That's why they charge Renta Tax to everyone, regardless of whether you rent out or not. That way they get a nice little earner without having to do checks. Well that's how I see it logically!

Well put Fibby and you are spot on about the fact that every non resident gets charged the rental tax. Of course if there are siginificant sums being deposited in your bank account they will want to know where they come from - a deposit over 6000€ is automatically reported to the authorities who will want to know where it has come from and what it is for and whether it should be subject to tax. Technically any money earned in Spain on real estate rental is subject to taxation in Spain.

Rgds

There are 5000 different taxes that can be in use throughout Spain. Probably 95% will not affect you. If you have a property in Spain and you do not live in the property you will be regarded as a Non Resident and as such will be responsible to pay some taxes in Spain. The question to ask "how best can this be achieved?" You effectively have three choices:

1. Do nothing

Advice: You can choose to ignore but you do run the (now) very real risk of being detected.

2. DIY

Advice: Be very sure you are receiving the correct information, disinformation and downright incorrect information is rife, do you really want to trust what your friend/neighbour/bloke in bar says when the only experience they may have is having paid their own tax. The fact that they have been successful in making a presentation does not guarantee that the information contained on the form is correct or that the tax has been calculated correctly.  Otherwise it is possible the tax office can demand proof how the taxes are calculated and if incorrect will recalculate and demand the extra. There are those that purport to know about taxes and yet say that if it is not correct, dont worry the tax office will never come back to you. Is that a situation that the taxpayer should be happy with, not sure if the calculation is correct, if the form has been completed correctly, if they will receive an additional demand from the tax office. There is nothing wrong with DIY but in some cases you need the right person for the right job and if the fee is reasonable, it can avoid a necessary but at the sametime aggravating annual process.

3. Employ the Services of Third Party/Fiscal Representative

Advice: To seek to the best Advice, the correct Advice, Professional Advice. This can be obtained from professional persons who have undergone training and/or received the appropriate recognized qualification/membership. This can be for example from a Lawyer registered here in Spain. Of course feedback from friends/neighbours/acquaintances on who they might recommend can be useful, but look for professionality and clarity. If someone you trust recommends them, it may work for you also.

I think anyone following other threads will no doubt suspect that Andy G has just joined us from another forum and has a vaguely hidden agenda here, but that said, and not wanting to have anything to do with the other hot topic doing the rounds, I just want to add my own experience to what he has said.

My gestor charged me €35 last year to do my tax return (renta). I am a resident property owner. My tax return is pretty simple (I don't earn enough for it to be complicated!) and I don't know how typical this charge is, but for me, personally, I can't be bothered to do it myself when a qualified professional will do it for me for so little.

Make your own minds up.

Cheers.

Hi Roberto,

Yes, maybe you are lucky paying so little for this service.

There are some honest Fiscals around who don't over charge, but there are som that take the mickey and overcharge.

The best thing is to shop around, get lots of quotes before paying a Fiscal.......................... or do it yourself!

Kind regards,

With respect to Roberto, I thought we were talking about Non Resident Taxes not the taxes of Residents/Nationals. I am in complete agreement about shopping around but not to suggest that cheapest is necessarily the best.  I have no hidden agenda, other than to contribute to the forum and to pass on the benefit of my experiences. Spain is different particularly for those who have experience only of matters outside of Spain and do not speak the language. To those that wish to do things for themselves I wish them luck, if they have the time and ability, anything is possible. For the rest who dont want the aggravation and the price is right choose to employ the services of another to act on their behalf.  How many people in UK for example calculate and prepare their own tax declarations apart from accountants and self employed persons?? Its a little bit like if you have problems with the breaks on your car. Do you call the mechanic or do you fix it yourself.? Horses for courses old chap.

Hello hello help.

Could someone clear this one up for me??  I was speaking to someone who said that if if I died before hubby or vice versa, one or the other has to pay inheritance tax. I pointed out that we are joint owners and surely this can't be the case as we are both on the deeds. This lady insists tis true. Anyone advise?

Gina

Apologies if I offended you Andy, I did not mean to sound like I was accusing you of any ulterior motive for your post, but in light of all the crap going on in a certain other forum, and which has been discussed at length in other threads on this one, I thought that others may think your timing just seemed a little coincidental. I'm sure it was just that - coincidence.

Apart from that, your input was clearly stated and perfectly welcome. As you say, these forums exist for everyone to share their own experience and to benefit from the experiences of others. I have no particular opinion on whether or not one should attempt to do their own tax returns, but it would be interesting to hear form others who have employed the services of a professional, residents and non-residents alike, to get a comparison of costs.

Candyfloss, yes it's true I'm afraid.

Thanks Roberto,

So I have to pay inheritance tax on something I already own? How bizarre. What is the best way around this then? We have a small mortgage on it at the moment, but when it's paid off whoever goes first has to pay 40% of the whole value of the property to taxman. Sorry to be so blonde, but is it better to keep a mortgage going then and transfer deeds to the children? I'm totally confused and would it help if we had a Spanish will?

Thanks Gina

I'm no expert on this Gina, so you should try to get some more qualified info, but assuming you own the property 50/50 (which will be detailed on the deed) you will only pay inheritance tax on the 50% you inherit. The amount taxed I think depends on the relationship, so a spouse pays the least, children I believe a bit more, more distant relatives or non-relatives more, etc...I think in your case it's probably less than 40%, but please don't quote me on that.

It's important to have a Spanish will. If not, you will have to get legalised translations of English wills before they will be accepted for the disposal of assets held in Spain. makes everything more complicated. Suggest you contact Maria de Castro mailto:mldecastro@costaluzlawyers.es for more professional advise.

Thanks janice,

I did ask solicitor when we were going through the buying process. He said we had to complete on property first. will e mail him now we've completed.

Thanks again

Gina

This may help:

http://www.spainlawyer.com/guialegal/guialegal.cfm?IDCAPITULO=11030000