# Resident or Non-resident Rental Income Tax



## cc427 (Mar 18, 2013)

Hi,

I apologise in advance, I have a lot of questions but would be grateful for absolutely any feedback out there. 

My situation is: I have owned a property in Spain since March 2012. The property has been rented out since May 2012. The annual rental income is approx. 7,000€

My main dilemma is whether to do the tax return as a resident or a non-resident. 

From my research it appears that resident property owners are allowed various deductions on their rental income tax. Things like 100% deduction if tenant is aged between 18 and 30 years and they earn more than IPREM rate (e.g. 7000€) otherwise its 60% for rental income, and deductions on utility bills, maintenance costs, insurance, property tax, contract (legal) costs, IBI, basura, comunidad, etc.

However, when I look at information for non resident rental income tax it seems that non of these deductions are applicable. 

Therefore, my questions are the following:

1. Resident or non-resident: Will I be asked to prove residency?
2. Deductions: What are available to non-residents?
3. What is the tax rate for non-residents? (24.75%)
4. What is the tax threshold?
5. When is the tax return due?
6. Where and how do I do the tax return?
7. What about IBI?


Many thanks in advance for your comments!


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## snikpoh (Nov 19, 2007)

cc427 said:


> Hi,
> 
> I apologise in advance, I have a lot of questions but would be grateful for absolutely any feedback out there.
> 
> ...


Firstly my situation, I am a landlord in Spain like you.

I asked about making deductions like you mention "utility bills, maintenance costs, insurance, property tax, contract (legal) costs, IBI, basura, comunidad, etc." and was told that I was not allowed to as it's not my main residence!

I have also never been asked the age of any of our tenants, although some are less than 30 years old.

Where do you live as this is crucial to whether you are resident (tax or otherwise)?


I am quite confused by what you have found as it doesn't match what I've been told - I'll be interested to see what others think.


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## NickZ (Jun 26, 2009)

The question is are you tax resident? If so you file like a resident.


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## Megsmum (Sep 9, 2012)

I am surprised that you can choose residency or not either you are or you are not


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## zenkarma (Feb 15, 2013)

cambio said:


> I am surprised that you can choose residency or not either you are or you are not


You can't.

You're either a tax resident in Spain or you're not a tax resident in Spain. 

You can't choose what you are.


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## zenkarma (Feb 15, 2013)

cc427 said:


> My main dilemma is whether to do the tax return as a resident or a non-resident.


Forget which one might be the most financially beneficial to you.

Do you live in Spain for more than 90 days in any one year or not? If you do you're a tax resident, if you don't, you're not.

Simple.


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## cc427 (Mar 18, 2013)

Thank you for your responses. 

The information regarding deductions for residents came from various sources, searching "Fiscalidad en el alquiler de vivienda" brings up some recent info.

Yes, you're right, technically I can't choose whether to be resident or non-resident. I guess what I really wanted to know is if non-residents could use the same deductions.

I could use professionals to do the paperwork for me, but I don't really think it's worth the fee for such a small case. Does anyone know the relevant form number?

Finally, my question about the IBI was related to its impact on the income tax. I've read that it can be deductible (for residents) and therefore wanted to know whether I should do one before the other, or if there was a combined form. 

I might try giving the Agencia Tributaria a call tomorrow. 

Thanks again.


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## xabiaxica (Jun 23, 2009)

zenkarma said:


> Forget which one might be the most financially beneficial to you.
> 
> Do you live in Spain for* more than 90 days in any one year or no*t? If you do you're a tax resident, if you don't, you're not.
> 
> Simple.


wrong......

it's more than 182 days in a tax year........


resident & tax resident are two entirely different things................



atm..........


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## zenkarma (Feb 15, 2013)

cc427 said:


> Therefore, my questions are the following:
> 
> 1. Resident or non-resident: Will I be asked to prove residency?
> 2. Deductions: What are available to non-residents?
> ...


1. Yes.

2. Have a look at Form 210 and see what deductions are allowable to EU residents.

3. 24.75%.

4. €5050. There are other allowance depending on your circumstances.

5. For 2013, 31/12/13.

6. Agencia Tributaria - Inicio

7. That depends on what your rental agreement says. If it says the tenant pays it, he pays it, if it doesn't, you pay it.

This is a good site: Spanish tax form 210


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## zenkarma (Feb 15, 2013)

xabiachica said:


> wrong.....


Bah! 

183 days, I'm getting confused


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## zenkarma (Feb 15, 2013)

xabiachica said:


> resident & tax resident are two entirely different things................


No they are not.

If you are resident there for more than 183 days in any year, you are a tax resident by default, whether you like it or not and whether you've registered as a resident or not.

And, whats more, if they catch you it's up to you to _prove to them_ that you've not been there for more than 183 days!


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## cc427 (Mar 18, 2013)

@zenkarma

That's brilliant. Exactly what I needed to know. Thank you.


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## NickZ (Jun 26, 2009)

No that just covers the Spanish end the treaty tie breakers have precende.


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## xabiaxica (Jun 23, 2009)

zenkarma said:


> No they are not.
> 
> If you are resident there for more than 183 days in any year, you are a tax resident by default, whether you like it or not and whether you've registered as a resident or not.
> 
> And, whats more, if they catch you it's up to you to _prove to them_ that you've not been there for more than 183 days!


agreed - but you can be _resident _at 90 days & yet never be tax resident....


even if you _do _have to prove it............


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## CapnBilly (Jun 7, 2011)

snikpoh said:


> Firstly my situation, I am a landlord in Spain like you.
> 
> I asked about making deductions like you mention "utility bills, maintenance costs, insurance, property tax, contract (legal) costs, IBI, basura, comunidad, etc." and was told that I was not allowed to as it's not my main residence!
> 
> ...


Are you really saying that you rent out properties (which I know you do) and that you don't deduct any expenses in arriving at your net income for tax. ?

If so I would be looking for a new gestor. This is covered under Articles 13 and 14 of ley 439/2007. In addition, article 16 appears to cover the reductions available if the lessor is between 18-35. If you click the link to article 23.2 of the Tax act, it takes you through to the detail.

Real Decreto 439/2007, de 30 de marzo, por el que se aprueba el Reglamento del Impuesto sobre la Renta de las Personas Físicas y se modifica el Reglamento de Planes y Fondos de Pensiones, aprobado por Real Decreto 304/2004, de 20 de febrero.[/url


Note, this is in spanish. I usually use Google Chrome which automatically translates it.


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## zenkarma (Feb 15, 2013)

xabiachica said:


> agreed - but you can be _resident _at 90 days & yet never be tax resident....even if you _do _have to prove it............


................      

...........

....


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## cc427 (Mar 18, 2013)

CapnBilly said:


> In addition, article 16 appears to cover the reductions available if the lessor is between 18-35. If you click the link to article 23.2 of the Tax act, it takes you through to the detail.
> .


I just saw that I need to have my tenant sign a document to say that she is under 30 and earning more than the IPREM, which I think is around 7,000€ (can't find the exact figure) before the 31st March, so soon! By searching "Artículo 16. Reducción por arrendamiento de vivienda" I found a sample document prepared by Madrid authorities for tenants to complete and sign. 

I'll get her to do it and cross my fingers that they provide 100% exemption, even though I'm a non resident.


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## nikkisizer (Aug 20, 2011)

Hello cc427,

If you spent 183 days or more in the UK during the 2012/13 tax year you will be classed as UK resident for tax purposes.

As UK resident you must declare your foreign income by submitting a UK tax return. 

If this applies to you you will need to register for self assessment if you have not done so already with HMRC to be able to submit your UK tax return.

The UK tax year runs from 6th April to 5th April and you will need to submit various schedules with your tax return to show the different forms of income and to also claim any possible tax relief that might be due.

You must ensure that your tax return is completed correctly.


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## cc427 (Mar 18, 2013)

Thank you very much for that information. It's good to know. Honestly I didn't spend much time in either country (Spain or UK), but I assume that, as a British citizen, that is my main residence.


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## zenkarma (Feb 15, 2013)

cc427 said:


> Honestly I didn't spend much time in either country (Spain or UK), but I assume that, as a British citizen, that is my main residence.


Domicile isn't easy to figure out.

Technically, if you're not resident in either Spain or the UK for the qualifying tax periods in any one year you shouldn't be paying tax in either country, unless as in Spain their tax laws say otherwise.

However, in the UK, the HMRC will argue, certainly in terms of Capital Gains Tax, that if you still own a property and/or still have significant family ties to the UK, no matter how long you spend in the country you are still liable for Capital Gains Tax.

Domicile and tax liability is a complex issue and you really would need to either seek specialist advice or read through all the necessary documentation to determine exactly what your position and situation is.


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## NickZ (Jun 26, 2009)

Citizenship is IIRC the last tie breaker. It's highly unlikely you reach this point.


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## cc427 (Mar 18, 2013)

Yes, I think it's time to call in an expert.


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