# Rental possibilities



## Robors2 (Jun 12, 2015)

HI, I wondered if people have some experience renting their properties in high season.
I have been looking for property to renovate in Spain for three years now and can not find suitable place for my budget.
I now think I need to up my budget to around 100-130k euro to get what I want.
In order to do this I will need to borrow some money and the investment will need to pay back the loan.
Vila would be located around 15-20 km from the beach and I would like it to be in quiet spot.
I would do the place up and then would like to rent it in high season, what are the best ways to do this and what costs are involved? 
I have read some posts here saying its' waste of time and money, is this the case?

Regards
Rob


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## Leper (May 12, 2010)

. . . . . forgive my cynicism . . . . like somebody is going to give away rental secrets hard earned to a competitor . . . . . . especially for an investment that will never nearly pay for itself . . . . another lamb to the slaughter I regret to say.


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## kaipa (Aug 3, 2013)

You don't say where in Spain you are looking and therefore it is difficult to assess how successful this venture will be. My own experience of this is that the popular haunts in the South of Spain are saturated with rental places. I think to be successful you probably need to have something at the high end of the market like a villa with a pool etc. You don't say if you live here or UK and that will also have a bearing on this. If you don't live here there might be tax implications. Also note that you will need a licence and quarterly accounts to be submitted. Again if you don't live here you will need an agency to manage the place. All in all it can be done but don't expect to make any money out of it unless there is change in the property market which looks unlikely given that supply in popular cheaper resorts outstrips demand. Good luck


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## xabiaxica (Jun 23, 2009)

Where I live some people move out of their homes for July & August & rent to holidaymakers, and that income goes a long way to funding their lives here, or to paying their mortgage. These are homes of 3/4+ bedrooms, pretty upmarket with pools that rent for around 2000€+ a week during those two months. 


To buy one you'd be paying a heck of a lot more than 130k.

Of course not everywhere is as expensive as Jávea. 

The thing is, being able to rent your place out isn't guaranteed. 

Quite a few I know have now stopped doing this since the holiday rental rules have been massively tightened up, requiring registration, which brings you to the attention of the taxman  They should have been paying tax all along of course, but so many simply didn't declare it, & have decided that it's no longer financially worth it.


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## Overandout (Nov 10, 2012)

kaipa said:


> You don't say if you live here or UK and that will also have a bearing on this. If you don't live here there might be tax implications.


TBH, it matters not where the OP lives, there WILL be tax implications. Remember that Spanish residents have a higher tax burden on second homes.

The OP makes it clear that the rental income will need to cover a financing arrangement but gives no other details of the situation. Entering into such a situation without doing a proper business case is financial suicide in any country, no amount of asking on a forum will avoid that fact.


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## Robors2 (Jun 12, 2015)

Thank you for your replays and I should have made my self more clear but I did not want to bore you with long post.
Now I have your attention so lets add more information.

I would like to buy property soon which needs doing up so I am busy in winter months and it would be wonderful to combine work with pleasure as my business in London is very quiet then.
I hope to finish the property within 5 years so I could semi retire and spend 6 winter months (90+90)in Spain and six months in England working.
I would like to buy villa/country house just south or north of Valencia and the property would have to be managed by agent for holiday rental.

My financial situation is stable (i hope) as the moneys I need to borrow would be the only debt I would have and I am 47. 
For tax reasons I remain employed by my own company and I pay tax in UK.
I am aware that there would be some tax to pay from rental property to the Spanish taxman
but would I need to pay more income tax if I am not Spanish resident?

Regards
Rob


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## Overandout (Nov 10, 2012)

Robors2 said:


> Thank you for your replays and I should have made my self more clear but I did not want to bore you with long post.
> Now I have your attention so lets add more information.
> 
> I would like to buy property soon which needs doing up so I am busy in winter months and it would be wonderful to combine work with pleasure as my business in London is very quiet then.
> ...


Short answer: yes.

A Spanish resident pays (or may pay, depending on their other income) a lower rate of tax on a second home than a foreigner who may own that same home.

The rate of tax that the foreigner (non tax resident) pays also depends where he/she is tax resident, as there is a lower rate for EU nationals.

We can expect that the rate to be paid by UK tax residents after Brexit will be the non-EU tax resident rate which is currently 24.75% (no deductables). So you should budget for around a quarter of your income being lost to the Spanish taxman.


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## kaipa (Aug 3, 2013)

Yes. I think you have to be aware of the situation here regarding tax for non-residents plus the requirements of being a landlord. Lots of people labour under the impression that you just buy a place rent it to people from the uk , put the money in your uk bank account, a pretend you know nothing about spain. You can't do that now. The authorities check up on each sale and tally that to your status. Your status is recorded in order to complete the sale. Many Brits have found this "annoying " as they realised investing in Spain isnt quite the cash cow they hoped for


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## kaipa (Aug 3, 2013)

Yes other strange thing that catches out Brits doing this kind of thing is that you can not deduct renovation work from your tax. So don't go thinking that you will be able to deduct a new kitchen or bathroom suite from anything if you thinking of renting of as a business. It is only things like replacing furniture etc which is tax deductible


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## Robors2 (Jun 12, 2015)

Thanks for your replies. 
Back to the drawing board for me.


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## kaipa (Aug 3, 2013)

Not saying you can't do it just that it is probably better to live here awhile to get a feel for things. There is only so much research that can be done on the internet. You need to come here and check out how it all works


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## Overandout (Nov 10, 2012)

Robors2 said:


> Thanks for your replies.
> Back to the drawing board for me.


Please take into account that the 24.75% tax rate for non EU residents is a worst case scenario.

The rates are revised quite often and do go down as well as up.

Also, you never know, the UK may end up with a tax treaty that keeps it as if it were an EU country, and that means that the tax rate is about half of that. But the problem with Brexit is that we just don't know.

Maybe instead of "back to the drawing board", it should be "sit tight and wait for the dust to settle"?


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## Megsmum (Sep 9, 2012)

Overandout said:


> Please take into account that the 24.75% tax rate for non EU residents is a worst case scenario.
> 
> The rates are revised quite often and do go down as well as up.
> 
> ...


Quick question... presumably this is tax rate after allowances. Is there a difference between EU and Non EU tax allowances?


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## Overandout (Nov 10, 2012)

Megsmum said:


> Quick question... presumably this is tax rate after allowances. Is there a difference between EU and Non EU tax allowances?


If you are not a tax resident, there are no allowances. You pay 24.75% on all the income (real or computed).


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## Megsmum (Sep 9, 2012)

Overandout said:


> If you are not a tax resident, there are no allowances. You pay 24.75% on all the income (real or computed).


Ah ok

I’m tax resident phew.... misconstrued the post


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## Robors2 (Jun 12, 2015)

I have spent two-three weeks a time in Spain two times a year for the last three years and I know where I would like to live.
If Brexit will bring big negative changes for Brits could I then use my Polish citizenship to buy property? 
I think I will have to wait some time and save up bit more so I can buy what I want out right.
Cheers
Rob


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## Overandout (Nov 10, 2012)

Robors2 said:


> I have spent two-three weeks a time in Spain two times a year for the last three years and I know where I would like to live.
> If Brexit will bring big negative changes for Brits could I then use my Polish citizenship to buy property?
> I think I will have to wait some time and save up bit more so I can buy what I want out right.
> Cheers
> Rob


You don't "use" a nationality to buy a property.

The non-resident tax that I mentioned is applied depending on where you are a fiscal resident.

I am British, but when I was a tax resident in Thailand, the rent from my apartment in Spain was taxed at 24.75%, because I was tax resident outside the EU.

But, if the UK does not get a preferential tax deal to keep it in line with the EU countries, you could consider becoming a tax resident ain Poland maybe? That would keep the tax at "EU" rates. 

Or, as I said before, maybe you don't need to be a pessimistic as I am!! There are many people who think that eventually Brexit won't actually have much effect and that life will continue as before for UK / EU relations, at least for the individual.


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## Robors2 (Jun 12, 2015)

Overandout said:


> You don't "use" a nationality to buy a property.
> 
> The non-resident tax that I mentioned is applied depending on where you are a fiscal
> resident. .[/QUOTE
> ...


This out of question as I have left Poland 27 years ago and I have never worked there.

Thank you.


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