Lower taxes on rentals in Spain

Law 4/2008 of 23 December removed wealth tax in Spain with retroactive effect from 1 January 2008 , both for residents and non-residents.

This removal has created some confusion among non – resident property owners in Spain who are in doubt about the duties or not to continue to file annual tax returns and submission of forms in connection with the property.

Well , the truth is that people should continue to declare and pay income tax, and should do so because the Spanish tax authorities have stepped up checks on people that were liable to wealth tax. They are eager to sanctions against those who do not meet their tax obligations.

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I. – PROPERTY for personal use ( not rented)
For each property for its own use , it must be paid annually in income tax for non- resident , calculated on a lease ( fictional ) of 1.1 % of assessed value, and on top of it again at a rate of 24%. If you have not been the owner throughout the year, or have been let out of the year , calculated on a lease ( 1.1% of assessed value) is reduced in proportion to the number of days the property has been used or have been used by the landlord.

If there is a value of the dwelling ( such as in newly constructed buildings) estimated from 50 % of the maximum sum of the two following : purchase price but value or verified by the IRS . Certain properties are exempt from this tax , as lands , buildings under construction and so on .

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Forms and deadlines for submission and payment of tax:
Model 210 for each taxable estate. Payment of tax can be made all year. For example, the tax for the year 2010 paid until 31 December 2011.

II. – Rented property . VERY IMPORTANT NEWS since 1 January 2010. Until now , many non- resident who rented out property in Spain , declared not having received income because they have to pay income tax for non -residents at 24% of gross income ( 25 % until 31/12/2006 ) without the possibility of deduct expenses . This meant a very high taxation. From 1 January 2010 , the non- resident who is resident in another EU country and rent property in Spain, pay income tax ( 24% ) of net returns, and not on gross rent.

Landlords can now deduct all expenses of the property ( in the period in which property has been leased ) as garbage fee , council tax , repairs and maintenance costs, interest on loans used for the acquisition or improvement of property , etc. . Thus, taxation greatly reduced for these non- resident , which will now be much more willing to declare income , especially now in these times where tax authorities are extra careful with such income.

Even the non -residents who rent business premises, and where the tenant withholds 24% income tax for ikkeresidente , the landlord may request a refund of all or part of this Income taxes . Landlords who do not live in the EU must continue to pay 24% tax on gross income. If a property has been rented out part of the year and part of the year has been provided for the owner, the landlord will have to declare two types of income : Rental income ( gross or net of EU citizens ) and imputed rentals on the residence has been used by owner.

Forms and deadlines for reporting rental income :
– Form 210 is used as a common form for all rental homes or offices . This is done every quarter. If it turns out that you have to pay taxes , do so within the first 20 days of April, July , October and January.
– Form 210 should be used if one should have a tax refund (for example, because one has rented a building and the tenant has retained 24 % tax, and you as the tenant had expenses that can be deducted ) .

The form must be submitted by 1 February and always for the previous year . It is important to note that they can deduct expenses on Form 210 to reside in another EU country must provide proof of tax residence from the respective governments .




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