July 27, 2015 at 12:32 pm #187218trev farthingParticipant
could anybody please help me,i have an apartment in vera I am looking to rent it out,a company have told me no problem renting it as it is a desirable property,they tell me I will have to pay no rental tax as the income will be under 3000 euros,is this true,my research tells me I have to.please help
August 6, 2015 at 6:23 pm #187298Mark StücklinKeymaster
I hear conflicting advice on this. Some say there is an ‘arguable’ tax point that suggests you only pay tax if you earn more than 3,000 € per annum, others disagree. I’m trying to get a definitive answer. I’ll let you know here if I do.
August 9, 2015 at 1:42 pm #187307Martin SParticipant
I’d also be keen to understand this Mark, though I’m looking at a rental income significantly above EUR 3000 per annum. I.e. If this tax relief does apply in general, is it the case that a landlord would ‘only’ pay income tax on the income above EUR3,000 p.a.; or, that there is no relief if you earn over 3K p.a. from rent.
Whilst on the subject of paying tax on rental income, I’d be really keen to receive any links on articles that explain (in detail) the tax liabilites (with rates) for non residents on property ownership (particularly income tax and additional non resident property tax) buying in Madrid. It seems that taxes in spain are so high that it’s doubtful I could cover anywhere near the cost of even a cheap mortgage (20% deposit at 2% interest per year) with rental income alone. Even with the potential capital gains upside of a very repressed market looking to strongly rebound, it seems far from assured that one would turn a profit even after 10 years.
Perhaps someone can tell me, is it correct that I would pay 24% income tax on all rental income from the very first Euro? As a non resident I would have no other income in Spain, only rental income.
Any help greatly appreciated.
August 13, 2015 at 1:10 pm #187315Mark StücklinKeymaster
This answer kindly sent in by email from Louise Brace, who is having difficulty posting here (a problem others might be experiencing – I’m looking into it).
My name is Louise Brace from Rental Tonic.
I can answer this question. Firstly, as you will probably be aware, regulations for holiday rentals in Andalucía are still unpublished. We are waiting for the new decree to be published, which will regulate our industry in Andalucía. Until then, holiday rentals should use the tax requirements as stipulated by the LAU and the Arrendamientos de Inmuebles o Rendimientos del Capital Inmobiliario.
This stipulates that an owner must declare all income from rentals, from zero. So there is no 3,000 € minimum and you will be taxed on this income. For residents of the European Union, Iceland and Norway tax is calculated at 19.50% (20% before 20th July 2015) and all other regions at 24%.
For further information you can get in touch with us and it’s also a good idea to get to know Apartsur, the Andalusian association who support owners of holiday rentals.
I hope this helps
August 13, 2015 at 10:55 pm #187328Louise Brace – Rental TonicParticipant
Firstly, thanks to Mark for posting my response for me. I am back and able to respond directly now.
I also wanted to reply to Martin’s question. Martin, as per my response, there is no 3,000 € tax relief unfortunately, so don’t add this into your calculations. Another downside to buying property in Madrid for short-term rentals is that the regulations for holiday rentals introduced last year, put a minimum five day stay into the equation. And with this you have to bear in mind that the average stay in Madrid is four days. A convenient little caveat helped along by the regional hotel industry.
However, there are lots of financial benefits to owning a holiday rental, as long as you buy wisely and run your business professionally. If you need any help, do get in touch.
August 16, 2015 at 11:21 am #187348Martin SParticipant
Many thanks for your responses , very helpful indeed. I’m gradually coming to the conclusion that without being resident in Spain the profit margin is very thin indeed, likely too thin to be advisable. With 25% to a ‘good’ management agent and 24% of the remaining to the government the remaining 57% is a long way off covering mortgage and IBI and community fees and utilities, wifi, bank costs etc. I’m looking at the luxury rental market with 100m2+ in Salamanca, but I only have the agent(s) word on the expected occupancy rates. Even at 100% occupancy ( largely impossible of course) we’d still be heavily reliant on capital gain to balance the investment. If you have any other suggestions on area’s of spain that have both a reliable rental market and a higher yield, I’d love to hear your thoughts. Many thanks. Martin
August 20, 2015 at 10:34 am #187358Louise Brace – Rental TonicParticipant
Firstly, can I say that 25% to a ‘good’, even ‘brilliant’ agents seems very steep to me. Let me have a chat with some very good agents and ask what are the parameters for agent commission.
Secondly, I wanted to mention that Salamanca, being within Castile y Leon, doesn’t currently have any regulations in place, so you would still be operating under the LAU (urban rental act), rather than a legislation specifically designed for holiday rentals. Of course, that doesn’t mean you won’t have to pay taxes unfortunately.
If you want to maximise your income and bookings, I would strongly advise that you develop your own channels of marketing – website, social media – rather than being reliant on an agent or holiday rentals portal like HomeAway. Focus on selling the experience – the local area, the culture, gastronomy, think about what a guest would want from a luxury rental i.e. offer chef services, concierge etc. Salamanca is a very niche area and if you get your marketing right, you will do well.
Let me come back to you on typical agent commissions.
August 26, 2015 at 9:57 am #187369maplehomeParticipant
it is change time by time
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