my parents retired to Spain in ’91 – buying their own house near Benissa – and returned to the uk in ’15. Dad is no longer with us and their house was rented on a long term basis for the last two years. This has not been a pleasant or fruitful experience. Mum wants to sell and buy something here. I’m not sure that it’ll be either easy to sell or realise enough equity to do that, quite apart from the significant costs involved, so holiday letting is under consideration, in the hope that it’ll be more lucrative.
Can I canvas the thoughts, advice, experiences of the community intelligence, pls? E.g. What taxation should I be aware of, apart rom the existing local taxes? Assuming the revenue is taken in the U.K., by a U.K. resident, I assume there will be no Spanish income tax due?
Renting your house out in Spain used to be easy but the Spanish authorities have tightened up considerably in the last few years. You will almost certainly need a Tourist Licence to rent out your house which will quite likely require you to update your escritura, you will need to fill in a Modelo 420 tax form each year for which you will need a Gestor. The house will need to be equipped for renters, no disrespect to your parents but as they lived in the house for 10 years it is likely you will need to check the inventory throughout and replace with new as needed, renters these days have high expectations. Then you will need to find someone to manage the property for you, advertise and manage clients/bookings.
Currently you only need to pay tax in the UK, however, after Brexit this may well change.
Renting out from afar is not a walk in the park particularly if you do not make frequent visits to manage the upkeep of the property. Personally I think your mother is right, sell up and buy something in the UK. The exchange rate is favourable at the moment and holiday properties are selling even to Brits!
A few additional thoughts from my experience owning a property near Alicante which I also holiday let as I am UK resident and the annual costs of simply having the property are high. I have a Spanish bank account which receives the rental income and pays the bills and the taxes. Unlike some, I operate by the rules (as I understand them), I pay Spanish income tax via the 210 tax form at 19% on the rental ‘profit’, 24% after Brexit with less claimable expenses. I have to declare this income also in the UK where due to the reciprocal tax agreements between the UK and Spain, the tax already paid in Spain is taken into account. I pray those reciprocal agreements survive Brexit!
All this and managing the marketing and bookings process takes a lot of work. If you don’t want to keep your parents house, I agree it would be best to sell. However there are thousands of properties for sale and loads of estate agents, some of whom will work harder to sell your particular property than others……. We are used in the UK to appreciating property values, in Spain most properties seem to depreciate over time. Also with no disrespect to your parents, but if the property feels dated or worn, it will only actually sell at a low price, especially if there is a lot of similar ageing property for sale nearby. However if freshly painted, kitchen and bathroom looking good and great photos taken, you may do better 🙂
Also be very aware of Spanish inheritance law, get some professional advice on your particular circumstances asap.