# Tax resident in Spain, �2nd home tax� on UK property



## larryzx (Jul 2, 2014)

*Tax resident in Spain, ‘2nd home tax’ on UK property*

I have been unable to get a clear answer to this question. 

Does one who is tax resident in Spain have to pay the equivalent to a ‘second home tax’ on property owned outside Spain, say in UK , when they make their Spanish annual income tax return?

The property was declared on a 720. 
There is no income from the property.

My gestor says I do have to pay (using 50% of the purchase price X 1.1% at 24.75%) whilst another gestor says I do not.

I would appreciate in-put from anyone with un-let property in another country who has knowledge of this.

Thanks


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## extranjero (Nov 16, 2012)

Don't you have to pay imputed tax on it in Spain?


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## larryzx (Jul 2, 2014)

I just had a call back from an adviser at:- Your legal and tax advice in Spain | Ábaco Advisers.

When I called them and asked the question they were unable to answer. They have now researched it and say that if one is tax resident in Spain and in addition to their main residence in Spain, they own a property or properties in any country, one does have to pay the 'imputed tax' in Spain on that/those properties as part of their Spanish income tax.

I wonder how many Tax REsidents in Spain with properties in say UK, Ireland, etc pay that additional tax in Spain, or even know of the obligation to do so ?


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## Chopera (Apr 22, 2013)

extranjero said:


> Don't you have to pay imputed tax on it in Spain?


Yes I think you do and I think that's what Larry is talking about.

For property in Spain the imputed tax is based on the catastral value, but since it doesn't exist for UK property they use the calculation Larry describes.

I'd have thought this tax could be offset against mortgage interest payments and other costs, so you may not have to pay anything anyway.


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## extranjero (Nov 16, 2012)

When properties are declared on the 720, wont' the tax office check that the imputed tax is being declared on the income tax return?
Bet many have never heard of it, and others have, but don't pay it?


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## larryzx (Jul 2, 2014)

Chopera said:


> Yes I think you do and I think that's what Larry is talking about.
> 
> For property in Spain the imputed tax is based on the catastral value, but since it doesn't exist for UK property they use the calculation Larry describes.
> 
> I'd have thought this tax could be offset against mortgage interest payments and other costs, so you may not have to pay anything anyway.


The adviser told me, that it can be off-set against the tax free allowance in Spain. In our case we pay 370 € for a modest property in the Philippines, which we cannot off set as other income (OAP mainly) exceeds the tax free allowance.


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## larryzx (Jul 2, 2014)

extranjero said:


> When properties are declared on the 720, wont' the tax office check that the imputed tax is being declared on the income tax return?


That was how we 'discovered' it. The gestor of course had the 720 info, and thus she included it in the following year's Income Tax Return. Unpleasant surprise !


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## extranjero (Nov 16, 2012)

Did you get fined?


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## Chopera (Apr 22, 2013)

extranjero said:


> When properties are declared on the 720, wont' the tax office check that the imputed tax is being declared on the income tax return?


Yes you'd have thought they'd do that. And given it's the purchase price that you declare on the 720, they have all the information to start sending out tax demands as well.



extranjero said:


> Bet many have never heard of it, and others have, but don't pay it?


I suspect the same applies to many Spaniards with second homes as well.


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## snikpoh (Nov 19, 2007)

larryzx said:


> I wonder how many Tax REsidents in Spain with properties in say UK, Ireland, etc pay that additional tax in Spain, or even know of the obligation to do so ?



Hopefully anyone who reads this forum as it's been discussed on numerous occasions before .


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## Williams2 (Sep 15, 2013)

larryzx said:


> I have been unable to get a clear answer to this question.
> 
> Does one who is tax resident in Spain have to pay the equivalent to a ‘second home tax’ on property owned outside Spain, say in UK , when they make their Spanish annual income tax return?
> 
> ...


Well my initial enquiries said the Imputed Income Tax is set at 2 per cent of the
'actual value' of your second home in the UK. Which is a whooping great tax bill
to pay up along with the Renta. God knows how Expats with 2nd Homes in
London & the Home Counties would afford paying 2 per cent on a £million
plus 2nd home in such areas.

But there again - as always there could be a caveat to this for - one of the
Spanish Tax advice websites, has this to say about Imputed Income Tax.

*Quote:*

The calculations use the rateable value (or valor catastral) as the base figure for the calculation. The percentage then to be applied is of 24% of a 2% of the rateable value (or 1.1% if this value was updated after 1994). In cases where the ratable value is not known, you can use half the purchase price as the base value for the calculations. In this case, the coefficient applied will be 1.1%.

Example:

Property worth €180,000 with a valuation set by the local government or, valor catastral, of €110,928 updated after 1994.

The tax amount to be lodged with the Tax Authority is €110,928 x 1.1% x 24%: €292.85 

The above figures ( more or less ) tally's with what larryzx is going on about.

Spanish Tax advice services website

*Now hear this* - as many British Expats know - the rateable value for properties in the UK was set ( in stone ) by the UK's Valuation Office Agency and then used to determine Council Tax banding following the abolition of the Poll Tax.

Therefore to find out what your rateable value is - you need to know what Council
Tax band you are under. Mine was Council Tax band C which the UK's 
Valuation Office Agency says is for a property with an Open Market Value of
between £52,001 and £68,000 - that was determined on the 1st April 1991.
The Open Market Value's set on the 1st April 1991 have been used throughout
England ever since, only in Wales was the rateable value of Welsh properties
reassesed, back in 2003 but in England they remained the same as they were 
in 1991.

Now using the valuation set by the local government - back in April 1991, on
the face of it - the 2 per cent tax on what my 2nd home was worth in 1991
- taking into account the additional arithmetic as shown above - seems
quite reasonable now :eyebrows:

Go to any English Council website and look under the section called:
Council Tax Valuation Bands for England. They will all say that . . . . . . . 
The Council tax band for your property is calculated based on the property value
on the 1st of April 1991.
Even if your property was built after 1991. Your home will be based on what the
equivalent Open Market value of it would have been worth back in 1991.

For example:

http://www.haringey.gov.uk/sites/ha...ou_disagree_with_your_council_tax_banding.pdf

Lets have some positive replies on the question of Imputed Income Tax. I've
naturally only just started to follow up on this issue myself, so I cannot say how
accurate my research on the matter is - without going in depth - on this form
of Tax. So all the above is IMHO based on what I can determine, from sources
on the Internet.


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