Re: Re: British expats must declare overseas assets



@euphony wrote:

Hi all,
I’m very pleased to have stumbled across this forum as this new development has concerned me for a while (ever since I first heard of it).
I’ve got very confused about the whole issue so wondered if anyone would be able tell me how this would affect me and my wife? We bought our home in the UK in 2009 for £134,000. We are looking to move to Spain permanently in the next 2 years, buying a modest property over there (no more than £90,000) and renting out our UK house (we have no mortgage on it now) and using that as income, plus topping the income up with my wife’s pension of £400 a month (when it starts, I am younger than her so my pension can”t be factored in for a few more years yet).
I’m confused about what the implications are for us, and at the moment it has put our move to Spain on hold.
I’m hoping someone can give me an idea of how we’d be affected as I’m quite lost with it all!
Many thanks in advance for any help

Income from your property will be subject to UK tax and Spanish tax. However if the property is in both your names you can both take advantage of the fact that the first 10k or so is income tax free in the UK. By the time you have taken into account other tax deductable costs associated with letting out a property in the UK, you may well find you don’t have to pay any tax in the UK at all. If you find that you still have to pay UK income tax it might be worth taking out a mortgage in order to offset interest payments against income tax.

In Spain you will have to declare the property on the modulo 720 form but bear in mind that that form is just a declaration. It is not a tax return. You will also have to declare the income from the UK property to the Spanish tax authorities and they might tax you. They should take into acount any tax you have already paid in the UK though.