I'm considering buying an apartment to rent out and need advice

[Clockwatcher]

Hello everyone,

Due to the miserly interest rates being paid out at the moment I am considering using my savings to buy an apartment to let out whilst I count the days down to my retirement.

Although sorely tempted not to notify the blood-suckers at the HMRC of any such purchase I understand they are using foreign land registries to trace owners.

Before starting any detailed research I wonder if anyone could advise me:

1. What rate of UK tax am I likely to pay on any income from letting my property out?
2. What rate of Spanish tax am I likely to pay on any income from letting my property out?
3. Any other pitfalls?

Thanks

[Fivepence]

Hello everyone,

Due to the miserly interest rates being paid out at the moment I am considering using my savings to buy an apartment to let out whilst I count the days down to my retirement.

Although sorely tempted not to notify the blood-suckers at the HMRC of any such purchase I understand they are using foreign land registries to trace owners.

Before starting any detailed research I wonder if anyone could advise me:

1. What rate of UK tax am I likely to pay on any income from letting my property out?
2. What rate of Spanish tax am I likely to pay on any income from letting my property out?
3. Any other pitfalls?

Thanks

:welcome: to the forum.................you'll get loads of advice soon, just hang on :tiphat:

[karinagal]

The rate of tax you would pay in the UK is dependant on the total of your earnings for the year so unless you're willing to divulge your earnings on an open forum, you would be best heading over to www.hmrc.gov.uk and reading the Self Assessment pages for guidance....

[Fivepence]

Hello everyone,

Due to the miserly interest rates being paid out at the moment I am considering using my savings to buy an apartment to let out whilst I count the days down to my retirement.

Although sorely tempted not to notify the blood-suckers at the HMRC of any such purchase I understand they are using foreign land registries to trace owners.

Before starting any detailed research I wonder if anyone could advise me:

1. What rate of UK tax am I likely to pay on any income from letting my property out?
2. What rate of Spanish tax am I likely to pay on any income from letting my property out?
3. Any other pitfalls?

Thanks

If you have a few hours to spare Clockwatcher.............read this thread (http://www.tenerifeforum.org/tenerife-forum/showthread.php?23-The-Tenerife-illegal-lettings-thread)

[BobMac]

As there are laws in the Canaries regarding the Holiday Letting of property, I suggest you start HERE (http://www.tenerifeforum.org/tenerife-forum/showthread.php?23-The-Tenerife-illegal-lettings-thread)

Good Luck - You're going to need it !!

[Clockwatcher]

Thanks for the replies.

[tonym]

Looking for a buy to let ? Do yourself a favour and buy something in the uk, it's a much safer investment and you might even get a return.

[princessmonika]

Looking for a buy to let ? Do yourself a favour and buy something in the uk, it's a much safer investment and you might even get a return. yes i think so as well

[Goldenmaniac]

Hello everyone,

Due to the miserly interest rates being paid out at the moment I am considering using my savings to buy an apartment to let out whilst I count the days down to my retirement.

Although sorely tempted not to notify the blood-suckers at the HMRC of any such purchase I understand they are using foreign land registries to trace owners.

Before starting any detailed research I wonder if anyone could advise me:

1. What rate of UK tax am I likely to pay on any income from letting my property out?
2. What rate of Spanish tax am I likely to pay on any income from letting my property out?
3. Any other pitfalls?

Thanks

I am assuming you are fiscally resident in the UK.
The income from property is taxed in the European member state where the property is located.
So here you would pay (currently) 24.75% of the income less expenses directly associated with the property let/pro rata for the period let.

Ie Your community fees are 500 per year but you only have a tenant for 6 months of the year then you could deduct 50% of the community fees from the income received.

I am assuming long term rental (you can read about the pitfalls of holiday lets elsewhere in the forum)

You declare the income and pay the tax quarterly. You then pay pro-rata "Deemed income tax" here once a year for the part of the year that you did not have a tenant. This is a fixed calculation connected to the Valor catastral (rateable value)

However you also need to declare the income in the UK as part of your world wide income/assets BUT because of double impositions you don't pay tax on the same thing twice so you get to deduct the amount you paid in Spain.

The problems are that the income here grouped with your other income in the UK MAY take you into a higher tax bracket so you are deducting the 24,75% paid in Spain from possibly 40+% charged on the world wide income in the UK.

You also need to be aware that the UK tax year goes Apr to Apr but the Spanish one Jan to Dec so you have to keep your wits about you!

[Bazz]

Looking for a buy to let ? Do yourself a favour and buy something in the uk, it's a much safer investment and you might even get a return.

I definitely agree with you!

[princessmonika]

unless you want it just for you and family, there is a minefield out here to rent out property-- you want to read up about the pitfalls-- invest your money where you know the system -- holiday home only, if you can afford it- even at that ,you pay a none resident tax,-- . regardless, even if you are renting the property out or not-- the councel tax you pay every year, renting or living there as well. plus community fees, and waste collection--

[junglejim]

What i find confusing Goldenmaniac is that if you rent out and declare your income ,you can offset appropriate expenses against the tax due , but if you have to pay the deemed income (despite not letting) you can´t offset the expenses ? Seems very illogical and unfair!

[princessmonika]

What i find confusing Goldenmaniac is that if you rent out and declare your income ,you can offset appropriate expenses against the tax due , but if you have to pay the deemed income (despite not letting) you can´t offset the expenses ? Seems very illogical and unfair! a very, very good point-- something does not look right-- maybe we can get it in UK or ireland on our tax return-- will ask my accountant--

[boredinscotland]

buy and rent out in UK, only way you will get a return, I have done so in both countries so know what I'm talking about

[bonitatime]

Ir may be confusing but thats how it is

[Dizzy blonde]

I am assuming you are fiscally resident in the UK.
The income from property is taxed in the European member state where the property is located.
So here you would pay (currently) 24.75% of the income less expenses directly associated with the property let/pro rata for the period let.

Ie Your community fees are 500 per year but you only have a tenant for 6 months of the year then you could deduct 50% of the community fees from the income received.

I am assuming long term rental (you can read about the pitfalls of holiday lets elsewhere in the forum)

You declare the income and pay the tax quarterly. You then pay pro-rata "Deemed income tax" here once a year for the part of the year that you did not have a tenant. This is a fixed calculation connected to the Valor catastral (rateable value)

However you also need to declare the income in the UK as part of your world wide income/assets BUT because of double impositions you don't pay tax on the same thing twice so you get to deduct the amount you paid in Spain.

The problems are that the income here grouped with your other income in the UK MAY take you into a higher tax bracket so you are deducting the 24,75% paid in Spain from possibly 40+% charged on the world wide income in the UK.

You also need to be aware that the UK tax year goes Apr to Apr but the Spanish one Jan to Dec so you have to keep your wits about you!

Bloody 'ell we will be renting if we decide to join you. We don't need all this hassle when we have retired.

[bonitatime]

This was for somone who bought an apartment and rented it to someone else
Not somone who rented an apartment

[Goldenmaniac]

What i find confusing Goldenmaniac is that if you rent out and declare your income ,you can offset appropriate expenses against the tax due , but if you have to pay the deemed income (despite not letting) you can´t offset the expenses ? Seems very illogical and unfair!
As far as I am aware you can offset some expenses on the UK side of things and also deduct the deemed income tax paid in Spain.. but double check on that because I'm not so up on UK stuff.
As far as Spain is concerned if you are not letting you have no expenses - it's a second home not a habitual residence so you just pay the deemed income tax on the annual calculated value of the asset... as to unfair take it up with the Spanish PM I suppose :)