Tax On Rental Income Spain?

Tax On Rental Income Spain
Tax treatment of income and gains

Taxpayer Basis of tax Tax levied Tax rates (2022)
Resident individual Non-resident individual Resident company Non-Resident company Rental income Capital gains Rental income Capital gains Rental income Capital gains Rental income Capital gains Individual income tax Individual income tax Income tax non-residents Income tax non-residents Corporate income tax Corporate income tax Income tax non-residents Income tax non-residents 19 – 52% 19 – 26% 19 – 24% 19% 25% 25% 19 – 24% 19%

Taxes in Spain are split between state and regional governments, with each of Spain’s 17 autonomous regions deciding its own tax rates and liabilities. This means Spanish tax rates vary across the country. Under Spanish law, income and capital gains triggered by Spanish real estate properties are taxable in Spain, whether they are realised by a Spanish resident or non-resident. There are no separate taxes for income and capital gains in Spain.

If a non-resident company has a permanent establishment in Spain its taxable presence will be determined in accordance with the provisions of corporation tax rules, with some limitations on the deduction of payments attributable to the headquarters for fees, interest, commissions, technical assistance services and use or assignment of assets or rights.

Rental income Individuals Introduction Rental income is taxed as ordinary private income. Liability to tax Resident individuals are subject to Spanish personal income tax (‘Impuesto sobre la Renta de las Personas Físicas’) on their worldwide income. Non-resident individuals are subject to taxation in Spain only on their Spanish source income.

  • Basis to tax The personal income tax of Spanish resident individuals are taxed at progressive rates as stated by state and autonomous communities scales, with marginal tax rates up to 52%;
  • The current Spanish income tax rate for non-residents is 24% of gross income, with no deductions permitted for expenses;

However, EU residents have a reduced income tax rate of 19% with the possibility of deducting expenses, if these expenses are directly related to income obtained in Spain. Companies Introduction Rental income is taxed as business income. Liability to tax Rental income earned by companies is subject to corporate income tax or income tax for non-residents.

Basis to tax Rental income earned by Spanish resident entities is subject to corporate income tax (‘lmpuesto sobre Sociedades’) generally at a flat rate of 25%. The current Spanish rental income tax rate for non-resident companies is 24% of gross income.

However, EU resident companies have a reduced income tax rate of 19%. Non-resident companies with a permanent establishment in Spain will be taxed according to corporate income tax rules. Capital gains Individuals Introduction Capital gains are taxed as ordinary private income.

  • Liability to tax Resident individuals are subject to Spanish personal income tax (‘Impuesto sobre la Renta de las Personas Físicas’) on their worldwide income;
  • Non-resident individuals are subject to income tax for non-residents only on Spanish source income;

Basis of tax Capital gains obtained by resident individuals in the transfer of real property are subject to taxation at the following rates (in tranches): 19% for gains up to €6. 000, 21% for gains between €6. 000- €50. 000, 23% for gains between €50. 000- €200.

000 and 26% for gains above €200. 000. Capital gains obtained by non-resident individuals are taxed at a rate of 19%. The person who acquires the building shall be obliged to withhold 3% of the agreed payment.

For the seller, this withholding acts as a payment on account of the capital gains tax that arises from the transaction. Local tax for capital gains A tax called ‘’Tax on increase of value of urban land” (‘IIVTNU’ in Spanish) applies to the increase of the value of urban land and will arise on its transfer.

The taxpayer is the seller and it is a deductible expense for personal income tax purposes. Companies Introduction Capital gains are taxed as business income. Liability to tax Capital gains earned by companies are subject to corporate income tax or income tax for non-residents.

Basis to tax Capital gains realised by resident companies on the transfer of Spanish property are subject to Spanish Corporate Tax (‘Impuesto sobre Sociedades’) at a flat rate of 25%. Capital gains obtained by non-resident companies are taxed at 19%. Local tax for capital gains A tax called ‘’Tax on increase of value of urban land” (‘IIVTNU’ in Spanish) applies on the increase of the value of urban land and arises on its transfer. Spanish VAT & transfer taxes

Taxpayer Basis of tax Tax levied Tax rates (2021)
Resident individual Non-resident individual Resident company Non-Resident company Rental income Transfer of real estate Rental income Transfer of real estate Rental income Transfer of real estate Rental income Transfer of real estate Value Added Tax Transfer Taxes Value Added Tax Transfer Taxes Value Added Tax Transfer Taxes Value Added Tax Transfer Taxes 0;10;21% 6-11% 0;10;21% 6-11% 0;10;21% 6-11% 0;10;21% 6-11%

Value Added Tax Individuals Introduction Value added tax is a tax based on the increase in the value of a product or service at each stage in its supply chain. Liability to tax Spanish VAT rules will apply to real estate properties located in Spanish territory. Basis of tax If the seller is an entrepreneur for VAT purposes and delivers a new or substantially refurbished building, then based on the consideration of the first transmission given by the VAT Law, this operation would be subject to (and not exempt from) VAT.

The taxpayer is the seller and it is a deductible expense for corporate tax purposes. Consequently, the buyer would have the obligation to bear the VAT passed by the seller; such a transaction would be taxed at a reduced rate of 10% if the acquired property is a residential property (or 21% in other cases, for example an office or parking).

The transfer of second-hand properties is exempt from VAT. In this sense, two situations should be considered, which depends on the intended use of the property by the purchaser:

  • If the intended use of the property implies having the right to totally or partially deduct VAT, it would be possible to waive the VAT exemption and be taxed at a reduced rate of 10% if the acquired property is a residential property (21% in other cases). Under this scheme a reverse charge mechanism applies.
  • Should the requirements to waive the VAT exemption not be met, then the transfer would be subject to transfer tax at a rate of 6-11% of the purchase price, dependent on the Autonomous Community in which the property is located and its fair market value.

If the seller is not considered as a professional for VAT purposes, the transfer remains in any case subject to transfer tax at a rate of 6-11% of the purchase price. In the case of residential rents, this operation is exempt from VAT, but if the tenant is an enterprise it would be a subject to the operation of VAT at a rate of 21%. lf the enterprise sublets the house to one of their workers, it would then be an exempt operation.

In a case where the landlord rents fully, furnished apartments and also commits themselves to providing ancillary services, such as restaurant, cleaning, laundry or similar services, this operation would be subject to (and not exempt of) VAT, at a reduced rate of 10%.

Interaction with transfer tax In a case where VAT is charged (i. subject to VAT and not an exempt operation), the transfer of the real estate is exempt from transfer tax. Companies The same rules apply as for individuals. Transfer taxes Individuals Introduction Transfer tax is a tax that applies on the passing of real estate from one person to another.

Rights of immovable property can qualify as real estate. Liability to tax Transfer taxes apply with the acquisition of the legal or economic ownership of Spanish real estate and is payable by the purchaser.

Basis of tax The reference value of the immovable property will be taxed at a rate of 6 -11%, dependent on the location of the real estate, as it is a regional tax. The reference value is annually determined by the General Directorate of Cadastre based on the on the analysis of prices reported by notaries public in real estate transactions made and is capped by the market value. Companies The same rules apply as for individuals Local taxes

Taxpayer Basis of tax Tax levied Tax rates
Resident individual Non-resident individual Resident company Non-Resident company Cadastral value Cadastral value Cadastral value Cadastral value Real Estate Tax Real Estate Tax Real Estate Tax Real Estate Tax Depends on the local authority Depends on the municipality Depends on the local authority Depends on the local authority

Introduction Every local authority levies an annual tax on Spanish real estate. Real estate tax is deductible for corporate and personal income tax purposes if rental income exists. Liability to tax Every owner or user of residential or commercial buildings in Spain is liable to local tax. Basis of tax Real estate tax is levied on an annual basis and rates may range from 0.

  • Exemptions In a case where a real estate transfer is subject to and not exempt from VAT, transfer tax does not apply;
  • 4%-1;
  • 10% of the cadastral value (the official value of a property given by Administration) of urban properties, and 0;
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3%-0. 9% of the cadastral value of non-urban properties. Local authorities are the ones who increase or decrease these rates, which depends on the location of the property. The taxpayer is the owner of the real estate, or the person who occupies it. Spanish Net Wealth/worth taxes

Taxpayer Basis of tax Tax levied Tax rates (2021)
Resident individual Non-resident individual Resident company Non-Resident company Individual total net worth Individual total net worth Not applicable Not applicable Net worth tax Net worth tax Not applicable Not applicable 0. 2–3. 75% 0. 2–3. 75% Not applicable Not applicable

Individuals Introduction Net worth tax is a tax levied on the total value of an individual’s net worth, including real estate. It is a regional tax. Liability to tax Spanish wealth tax (‘Impuesto sobre el Patrimonio’) is payable by both residents and non-residents (if they own property in Spain), although the rules that apply to each are different. Residents pay the wealth tax on their worldwide assets, whereas non-residents are only liable on those net assets located in Spain.

  1. Basis of tax The wealth tax on assets is a tax applied individually, not on annual income or transactions, but on the personal wealth of natural persons and based on the value of all the assets of a taxpayer;

If total wealth exceeds 700. 000€ (500. 000€ in some regions), the taxpayer will be liable to Spanish wealth tax of 0. 2-3. 75% of net assets, with variations between regions. As well as a general 700,000€ tax-free allowance, homeowners are allowed a further 300.

000€ allowance against the value of their main residence. Vehicles for Spanish real estate Commonly used vehicles for Spanish real estate Limited The ‘SL’, or Spanish limited liability company, is the most frequently used vehicle for the ownership of Spanish real estate.

Its equity is divided into shares and the shareholders of the SL are not personally liable for the business debt. The minimum share capital required for an SL is € 3. 000 (100% paid up of each share). Profits made by the SL are subject to the corporate income tax at a tax rate of up to 25%.

  1. Partnership & joint ventures Joint ventures (‘Unión Temporal de Empresas’, or ‘UTEs’) are particularly used by construction and engineering companies where contracts are awarded to more than one company and they are not paying corporate tax on the part of the taxable income imputable to the member resident company;

However, this tax regime does not apply to a portion of the taxable base of a joint venture attributable to non-resident members. This taxable base is taxed at the general tax rate of corporate income tax at the general rate of 25% Limited partnerships A typical limited partnership is the S.

Com. (‘Sociedad en Comandita’ or ‘S. Com. ‘). The S. Com. has at least a managing partner and a limited partner. Where a partner voluntarily leaves the S. Com. , then the entity will cease to exist. Limited partnerships are taxed in Spain through Spanish Corporation Tax at a general rate of 25%.

Trusts Trusts are not specifically recognised under Spanish law. For tax purposes, the assets and liabilities of a trust are allocated to the beneficiaries as personal income. Profits realised by the trusts will be taxed on the beneficiaries as personal income tax.

Foreign partnerships Non-established foreign partnerships are tax transparent. Partners are therefore taxable on their share of any profits or gains of the partnership. Specific real estate vehicles for Spanish real estate Real estate investment trusts The Spanish regime for ‘Sociedades Anónimas Cotizadas de Inversión Inmobiliaria’ (‘SOCIMI’), are the Spanish equivalent of a Real Estate Investment Trust (REIT), which provides corporate income tax benefits and beneficial tax treatment of dividend distributions.

A SOCIMI is a special legal and tax investment vehicle that is specifically devoted to real estate assets which generate rental income. A SOCIMI must be tax resident in Spain and is subject to 0% Corporate Income Tax. This rate is subject to the mandatory annual dividend distribution of profits.

  1. It is therefore important to look at the legal requirements of a SOCIMI;
  2. The only legal form permissible for a SOCIMI is a Spanish corporation (‘Sociedad Anónima’);
  3. The nominal capital of a SOCIMI must amount to at least €5m and at least 80% of the market value of its assets must consist of qualifying real estate assets and shares;

Real Estate Investment Funds Real Estate Investment Funds are collective investment institutions that must have as its principal purpose an investment in urban real estate to be leased. Real estate investment funds must be managed by a management company.

Most of the Board members and the senior management of the management company must have proven experience in real estate and financial markets. The minimum equity of real estate investment funds is €9. 000.

000 and at least 70% of the market value of its assets must consist of qualifying real estate assets and shares. When investing through a real estate investment fund, a reduced corporate income tax rate of 1% applies.

How much rental income is tax free in Spain?

Owners of rental property in Spain are liable to pay Spanish tax regardless of whether or not they are resident for tax purposes there. If you’re living in Spain for more than 183 days in a given tax year (1 Jan – 31 Dec) you’re considered a resident for tax purposes, even if you have not obtained a Spanish residence permit.

The current Spanish rental income tax rate for non-residents is 24% of gross income with no deductions permitted for expenses. However, EU residents may deduct expenses against rental income provided such expenses are directly related to the rental income generated from the Spanish property.

They can also avail of a reduced income tax rate of 19. 00%. Spanish rental income must be reported and paid one month after the rent is received. Get a Free Quote .

How do I declare rental income in Spain?

Tax forms: Declaring taxes from renting out a property in Spain – Owners who rent their houses in Spain are required to declare rental income through Form 100 ( Spanish Tax Return – IRPF ) or Form 210 (Non-Residents tax) depending on if the owner is a tax resident or not in Spain. The Spanish Tax Authority collects taxes on rental income quarterly, on the following dates:

  • First-quarter, 20th April (January, February, March)
  • Second-quarter, 20th July (April, May, June)
  • Third-quarter, 20th October (July, August, September)
  • Fourth-quarter, 20th January (October, November, December)

Form 210 requires the following information:

  • Identify the owner(s) of the property and address.
  • The full address, including the cadastral reference.
  • The period of time for which the property will be rented out, including the number of days each month.
  • Rental price and means of payment, plus expenses for utilities (gas, water, electricity, insurance, IBI property tax, etc. )
  • Moreover, you will have to provide your tax advisor with a copy of the deeds of the house and property tax.

How much tax do landlords pay on rental income?

How much tax you pay as a landlord all depends on your own set of circumstances. Each person’s tax position is different and has a direct effect on the amount of tax you owe. Landlords are usually in one of these three tax positions:

  • You don’t earn enough to pay any tax on your rental income.
  • You pay tax on your rental income at a rate of 20%.
  • Your pay tax on your rental income at a rate of 40% or above.

What can you deduct from rental income in Spain?

How do I avoid paying tax on rental income?

How much is airbnb tax in Spain?

Non-resident individuals are subject to a 24% (regular fixed tax rate), or a 19% rate if they are residents in an R or EEA country. A threshold applies for Spanish tax residents, depending on the type of income they receive.

Can you make money renting property in Spain?

Point Five: Your income – In general, with a competent approach, when renting out a house you can make good money, and the declared 5% per annum (of the market price of housing) is a very real figure. For example, if you want to rent a small apartment in a coastal city, and it’s market price for the current day is 100,000 euros, then you can safely count on a passive net income of 5,000 euros per year (or 600 euros per month). We will take care of the entire range of services of the entire rental process:

  • Obtaining a license.
  • Pre-rental preparation: major repairs or cosmetic restoration.
  • Professionally prepared advertising in the form of photo and video presentations.
  • Accommodation on all leading real estate rental portals and in the best print media.
  • Ensuring the process of settlement and eviction of tenants.
  • Cleaning and guarantee of the safety of your living quarters.
  • Full legal support: payment of taxes and utilities.

We hope this article has been helpful to you. WTG Spain – Your property in Spain is waiting for you.

Do I need a Licence to rent out my property in Spain?

Today we are going to show you how to get a tourist licence in Spain. This is necessary if you want to rent your property for short stays. Nowadays, the Tourist licence in Spain is compulsory in almost all the Spanish autonomous communities to rent properties for tourist propose or short terms rentals (less than 3 months).

That is why it is so important to proceed with the administrative procedures to obtain your tourist rental licence and to be able to continue renting your property legally in Spain, and no receive any fine.

In this article, we will inform you about the current legislation that applies to holiday rentals in each region. Every year the process change, they require more and more documents. If you are planning to rent out short terms your property, we highly recommend you to apply as soon as possible, before it becomes impossible.

See also:  Property Taxes In Spain For Non Residents?

Is rent tax deductible in Spain?

Spring is on our doorstep and with it comes the declaration of income tax, or as it is called in Spain, la Renta. Every year people wonder: Is rent tax-deductible when it concerns my income tax return? The answer is yes, but you must take into account several requirements before doing so.

  • For tenants the tax-deductible part of income tax return is divided in two elements: one on a country level (except for Navarra and Basque country) and one on a regional level;
  • So it all depends on the contents of your contract if you can deduct the IRPF of your rental property in your tax return;

In this article we will inform tenants on how to deduct rent in the income tax return, and we will also explain how to declare rental income for landlords. Our objective is for you to understand how to fill in this part of your tax return, whether you are one party or the other. Tax On Rental Income Spain Photo via Unsplash.

Do I pay tax on rental income if I have a mortgage?

If you have a residential, rather than a buy-to-let, mortgage, you must tell your lender if someone other than you will be living there. This is because residential mortgages don’t allow you to let out your property. You can get consent to let, but you will have to pay a fee, or be charged extra interest on top of your normal rate.

Unlike buy-to-let mortgages, consent to let agreements are time limited. This is usually for a period of 12 months, or for the length of time you have left on your fixed-term rate, so it can be useful as a stop-gap solution.

If you don’t tell your lender, there can be serious consequences as it might be seen as mortgage fraud. This means your lender could demand you repay the mortgage immediately or repossess the property. As a landlord you need to know your Income Tax and Capital Gains Tax liabilities.

Here’s an overview, with websites for more detailed information. Rental income is added to any other relevant income you earn during the financial tax year. For example, income from employment or possibly interest from savings – to calculate your tax liability.

You must declare this income on a Self Assessment tax return each year. But you might be able to claim certain expenses to offset against your rental income and reduce your tax bill. This includes some maintenance costs and letting agent fees, if you have a buy-to-let mortgage.

  • Landlords are no longer able to deduct mortgage interest from rental income to reduce the tax they pay;
  • You’ll now receive a tax credit based on 20% of the interest element of your mortgage payments;
  • This rule change could mean that you’ll pay a lot more in tax than you might have done before;

The property income allowance means property owners can each earn up to £1,000 rental income tax free per year. Basic rate taxpayers could save up to £200 and higher rate taxpayers up to £400. If you own a property jointly, for example with your partner, you can both claim the allowance.

If your rental income is £1,000 or less, you won’t have to declare or pay tax on this income. If you earn more than £1,000 in rental income, you can deduct the allowance from your receipts. But if you claim this, you won’t be able to claim for other allowable expenses.

The property income allowance will also apply to Class 4 National insurance contributions. You can’t use the property allowance against income from letting a room in your own home in conjunction with rent a room relief. If you’re selling a property that isn’t your main home – including a rental property – it’s likely you’ll have to pay Capital Gains Tax on any gain (profit).

You can offset expenses of a capital nature such as replacement windows against capital gains when the property is sold. As this might be many years later it’s important to keep records and evidence of any such expenditure.

Then when you come to sell, check with a financial adviser or accountant what you can claim back. These schemes are used to protect the tenants’ deposits. In England and Wales, you must by law put the deposits in a suitable scheme within 30 days of the date of the start of the tenancy agreement if you rent your home on an assured shorthold tenancy that started after 6 April 2007.

Landlords are limited in what fees they can charge to tenants. Refundable tenancy deposits are capped at no more than five weeks’ rent if the total rent is less than £50,000 a year, or six weeks’ if the total rent is more than £50,000 a year.

Holding deposits, used to reserve a property, are capped at one week’s rent. You’re still allowed to charge fees if the tenant asks to end the tenancy early, for late rent payments and if you pass on costs for things like utilities, Council Tax and TV Licence. You have many legal responsibilities to comply with as a landlord, including:

  • drawing up a legal tenancy agreement
  • safety of gas and electrical appliances you supply
  • fire safety of furniture and furnishings you supply
  • providing an Energy Performance Certificate for the property
  • protecting your tenants’ deposits in a government-approved scheme
  • checking your tenants have the right to rent your property if it’s in England.

The registration and licensing scheme in Wales aims to raise awareness of the respective rights and responsibilities of:

  • agents
  • tenants
  • landlords.

If a landlord wants to manage the property themselves, they must prove they’re ‘fit and proper’ to hold a licence. They must then take (and pass) approved training. Alternatively, they’ll be able to appoint a licensed agent to manage the property on their behalf.

What happens if you don’t declare rental income?

What happens if I don’t declare rental income? – If HMRC suspects a landlord has been deliberately avoiding tax, it can reclaim 20 years’ worth of tax payments. They can also impose fines up to the total value of any unpaid tax, as well as the underpaid tax.

What is the penalty for not declaring rental income?

Accidental landlords – don’t get caught out by the income tax trap – Around 7% of landlords in the UK are ‘accidental’ and never intended to let out a property. Reasons for being an accidental landlord include inheriting a property that hasn’t been sold on and being forced to let out a home that cannot be sold.

As an accidental landlord, understanding the laws around income tax and what needs to be declared can be difficult and, for many, it can also be somewhat of an unknown. HMRC estimates there’s approximately 700,000 landlords in the UK that have been receiving rent for a property, but haven’t been declaring it.

For each year that passes, the tax bill is mounting. In 2019, the government started to invest heavily in a specialist task force to hunt for landlords who had not been declaring rental income. Penalties for undisclosed income can be hefty, ranging from 15% up to 100% of the rental income in some cases.

However, all is not lost. For landlords who haven’t yet had the opportunity to declare previously unreported income, the Let Property Campaign is giving landlords the chance to get their tax affairs in order.

Our buy-to-let specialist , Donna McCreadie, says: “The Let Property Campaign was originally launched in 2013, but many people are still unaware of its existence. I often have landlords coming to me who are really distressed or worried because, for some reason, their income from a rental property hasn’t been declared.

Once I explain the mechanics of the Let Property Campaign to them, it really helps to ease the burden. We then work together to put a plan into action so that the tax owed can be settled with the minimum of fuss.

” What is the Let Property Campaign? Essentially, it is a government initiative which allows landlords to tell HMRC about any unpaid tax now. Landlords will then have 90 days to work out and pay what they owe with minimal penalties. It covers landlords in the following situations:

  • landlords with multiple properties
  • landlords with single rentals
  • those with student or workforce rentals
  • holiday lets
  • those renting a room out from their main home
  • those who live abroad for more than six months and rent out a property in the UK
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However, if you’re renting out a non-residential property, such as a shop or garage, or you are disclosing income on behalf of a company or a trust, the campaign does not apply. Donna continues: “Tax on rental property can be a complex area so it’s important that landlords who are unsure seek professional guidance. A specialist accountant, for example, can guide you through the rules and regulations, help you calculate the tax owed and ensure any mitigating factors are correctly applied.

How much is capital gains tax on property in Spain?

Capital gains tax – As a seller, you will pay capital gains tax on your profits from the sale. Capital Gains Tax is 19% for non residents from EU/EEA countries or 24% for non residents from other countries. According to Spanish tax laws, if you’re a resident, you are applied a scale between 19% and 23% and can also get tax relief if you have lived in the property for at least three years before selling it.

  1. As a seller, you need to file a tax return taking in account the 3% of purchase price that was initially retained by your buyer and pay the remainder within three months after the sale;
  2. If the amount withheld by the buyer exceeds the CGT payable, the seller may claim a refund of the excess amount, so it is important to obtain proof of the original 3% payment from the buyer, in order to file your return and fill the necessary forms;

Want to know more? Check out the predictions for the property market in 2020.

How much is capital gains tax in Spain?

Capital gains – Capital gains and losses are variations in the value of a person’s wealth due to an alteration in its composition that are not considered to be income under Spanish PIT law. It is important to note that capital gains can arise on all inte r vivos transfers, but not on mortis causa transfers.

  • When the capital gain or loss is generated from the transfer of an asset, it is calculated by deducting the previous acquisition value from its transfer value; otherwise, the capital gain or loss is the market value of the asset;

Capital gains arising from transfers of assets are included in savings income and are taxed at the corresponding progressive tax rates of between 19% and 26%. A transitory tax regime may be applied for transfers of assets or rights that are not used to carry on a business activity and were initially acquired before 31 December 1994. Therefore, if the transitory regime is applicable, the total capital gain should be divided into two parts:

  • The part of the capital gain generated from the acquisition date up to 19 January 2006, on which the reduction coefficients is applied.
  • The part of the capital gain generated from 20 January 2006 up to the date of the transfer. This part is taxed at a progressive tax rate of between 19% and 26% and no reduction coefficients apply.

With effect from 1 January 2015, this transitory tax regime is applied when the value of the transfer does not reach EUR 400,000 per taxpayer. For this purpose, the transfer values of all assets transferred from 1 January 2015 on which this transitory regime may be applied should be added together, and if the total amount exceeds the threshold, the transitory regime is applied proportionally to the part of the transfer value that does not exceed the threshold.

In accordance with this regime, reduction coefficients (14. 28%, 25%, or 11. 11% per year, depending on the type of assets, for each year that the assets or rights have been held between the acquisition date and 31 December 1996) may be applied on the proportional part of the capital gain generated from the date of acquisition up to 19 January 2006.

The capital gain generated from the sale of a person’s home is tax exempt for the same proportion as the amount that is reinvested in a new home, provided that the new home is purchased within two years. Capital gains not generated from transfers of assets (such as some lottery prizes) are included in the general tax base and are taxed at progressive tax rates, which are different for each autonomous community ( see the Taxes on personal income   section for further information ).

  1. Capital gains obtained in Spain by non-residents without a PE are taxed at a rate of 19% when they are generated from transfers of assets otherwise they are taxed at the general NRIT rate of 24% (for residents of other EU member states or EEA countries with which there is an effective exchange of tax information, the rate is 19%);

The transitory tax regime for transfers of assets and rights not used to carry on an economic/business activity and initially acquired before 31 December 1994 is also applicable for capital gains obtained in Spain by non-residents without a PE. Capital gains arising from transfers of assets by PIT payers over the age of 65 are tax exempt if the total amount of income obtained from the transfer is used within six months to establish an assured life annuity for the taxpayer.

A maximum of EUR 240,000 may be used to establish an assured life annuity. For partial reinvestments, only the part of the capital gain obtained that corresponds to the reinvested amount will be tax exempt.

For transfers of properties located in Spain by non-residents without a PE (individuals), the purchaser is required to deduct 3% of the price of the transfer and deposit it with the local tax authorities. This withholding is treated as an advance payment of capital gains tax for the seller.

Can you make money renting property in Spain?

Point Five: Your income – In general, with a competent approach, when renting out a house you can make good money, and the declared 5% per annum (of the market price of housing) is a very real figure. For example, if you want to rent a small apartment in a coastal city, and it’s market price for the current day is 100,000 euros, then you can safely count on a passive net income of 5,000 euros per year (or 600 euros per month). We will take care of the entire range of services of the entire rental process:

  • Obtaining a license.
  • Pre-rental preparation: major repairs or cosmetic restoration.
  • Professionally prepared advertising in the form of photo and video presentations.
  • Accommodation on all leading real estate rental portals and in the best print media.
  • Ensuring the process of settlement and eviction of tenants.
  • Cleaning and guarantee of the safety of your living quarters.
  • Full legal support: payment of taxes and utilities.

We hope this article has been helpful to you. WTG Spain – Your property in Spain is waiting for you.

How is UK rental income taxed in Spain?

UK rental income In Spain, it is taxed at the scale rates of income tax. A 60% reduction is available in Spain against the net rental income, but only for long-term lettings where the tenant uses the property as their main home.

How much is capital gains tax on property in Spain?

Capital gains tax – As a seller, you will pay capital gains tax on your profits from the sale. Capital Gains Tax is 19% for non residents from EU/EEA countries or 24% for non residents from other countries. According to Spanish tax laws, if you’re a resident, you are applied a scale between 19% and 23% and can also get tax relief if you have lived in the property for at least three years before selling it.

As a seller, you need to file a tax return taking in account the 3% of purchase price that was initially retained by your buyer and pay the remainder within three months after the sale. If the amount withheld by the buyer exceeds the CGT payable, the seller may claim a refund of the excess amount, so it is important to obtain proof of the original 3% payment from the buyer, in order to file your return and fill the necessary forms.

Want to know more? Check out the predictions for the property market in 2020.

Do I need a Licence to rent out my property in Spain?

Today we are going to show you how to get a tourist licence in Spain. This is necessary if you want to rent your property for short stays. Nowadays, the Tourist licence in Spain is compulsory in almost all the Spanish autonomous communities to rent properties for tourist propose or short terms rentals (less than 3 months).

That is why it is so important to proceed with the administrative procedures to obtain your tourist rental licence and to be able to continue renting your property legally in Spain, and no receive any fine.

In this article, we will inform you about the current legislation that applies to holiday rentals in each region. Every year the process change, they require more and more documents. If you are planning to rent out short terms your property, we highly recommend you to apply as soon as possible, before it becomes impossible.