Tax on long term rented property

[DonnaFranka]

Hi. Am thinking to down size for financial reasons and rent my property out for long let. Can anyone tell me how much tax I will have to pay on the earnings and also if expenses are deducted pre tax like the UK on such things as community, basura, IBI, insurance, maintenance and wear and tear. then I will decide if it`s worth it or not. Thanks very much.

[Foz]

Hi Donna, I have been doing long lets for a year now and havn't done the tax return yet ... but I met with my accountant before I started to ask a few questions. As I understand, expenses are deducted before tax.. as well as those you mentioned, interest on a mortgage can also be deducted. Tax is charged at whatever your normal income tax rate would be. You do not need to charge IGIC. I also believe that if you are renting to someone under the age of 35 you get a 40% reduction on your tax due ... but you would ned to check that.

[doreen]

DF, presuming you are a tax resident in Spain ... if yes, then all expenses you mention are deductible and I believe there there is a further 50% reduction in tax due as you are renting the property out as a dwelling, not to a business.

EDIT - Foz beat me to it ... I understand the 40% reduction is applied after the lower tax rate, so having a tenant under 35 would mean very little tax !