# Buy to Let Mortgages in Spain



## simms (Sep 9, 2013)

I was reading that several Spanish banks are offering buy-to-let mortgages but the article did not provide any details. Does anyone from this forum know of any bank that will base the mortgage on rental income from a property based on long-term lets?

I already have a property in Spain in my own name and probably maxed out my personal mortgage options and wanted to buy another property using a buy to let mortgage option.


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## zenkarma (Feb 15, 2013)

simms said:


> I already have a property in Spain in my own name and probably maxed out my personal mortgage options and wanted to buy another property using a buy to let mortgage option.


I suspect you'll need to put a decent deposit down on any potential buy to let mortgage, I assume you can do that?

Personally I don't think buying a Spanish property on buy to let is a particularly sensible thing to do given the prevailing renters market in Spain, but I guess it depends on the area you're considering buying into.

Just don't forget the Hacienda will want to tax 50% of the rental income from the property.

Personally I think you're stark raving bonkers to even consider a buy to let property in this current economic environment but I suspect that's not what you want to hear.


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## Sirtravelot (Jul 20, 2011)

zenkarma said:


> I suspect you'll need to put a decent deposit down on any potential buy to let mortgage, I assume you can do that?
> 
> Personally I don't think buying a Spanish property on buy to let is a particularly sensible thing to do given the prevailing renters market in Spain, but I guess it depends on the area you're considering buying into.
> 
> ...


Why?


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## snikpoh (Nov 19, 2007)

zenkarma said:


> I suspect you'll need to put a decent deposit down on any potential buy to let mortgage, I assume you can do that?
> 
> Personally I don't think buying a Spanish property on buy to let is a particularly sensible thing to do given the prevailing renters market in Spain, but I guess it depends on the area you're considering buying into.
> 
> ...



... not from us they don't!

We declare our rental income religiously (and have stated that it's rental income as opposed to anything else). We get taxed in the normal way.


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## Chopera (Apr 22, 2013)

Never heard of BTL mortgages in Spain. And if they did exist I'd be surprised if the banks allowed people to take them out - unless it was on a property the bank was trying to offload. Being a landlord is risky enough in Spain, the law favours the tenant much more than the landlord, and it until that changes I can't imagine banks entertaining the possibility of repossessing yet more properties, possibly full of tenants who can't pay the rent.


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## zenkarma (Feb 15, 2013)

snikpoh said:


> ... not from us they don't!


Not from you they don't what?

This is as I understand it for Spanish tax residents:

Spanish tax residents who rent out a property other than their home

If you have a property you rent out in Spain and live in Spain yourself you will have to declare the income on your Spanish tax return (declaracion de la renta de las personas fisicas) every year, in the May-June period following the year of the rental i.e. in arrears.

The tax treatment is generous:

- there are deducible expenses allowed (e.g. utilities, advertising and legal costs, rates, and even interest and amortisation of the property)
- there is a 50% deduction if the property is rented out as a dwelling (as opposed to a business)​
Am I interpreting that 50% deduction incorrectly?


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## webcrest (Sep 10, 2013)

You can find online consultant in local area where you are looking to buy home. it is better if someone from your friends refer a lawyer for this purpose. Bank always issue loan or funds if you already have enough. if you are really needy, bank will never offer you. this


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## Chopera (Apr 22, 2013)

zenkarma said:


> Not from you they don't what?
> 
> This is as I understand it for Spanish tax residents:
> 
> ...


Where did you get that from? If they are talking about tax deduction then I guess it means you can deduct 50% from your tax bill if you rent to people rather than businesses - which seems very generous.


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## crookesey (May 22, 2008)

simms said:


> I was reading that several Spanish banks are offering buy-to-let mortgages but the article did not provide any details. Does anyone from this forum know of any bank that will base the mortgage on rental income from a property based on long-term lets?
> 
> I already have a property in Spain in my own name and probably maxed out my personal mortgage options and wanted to buy another property using a buy to let mortgage option.


The guy who's villa we have rented for holidays has a high equity holiday home loan from a Spanish bank. He has placed the property in a UK Ltd Company, that requires half yearly accounts with any tax being owed to the UK revenue. He has had long term lets in the past (circa 6 months), will probably never be a Spanish resident and can pass the shares of the company onto his kids without any tax liability, tax would only be payable if the villa were sold and it's proceeds left the company 'wrapper'.

I hope that this helps.


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## zenkarma (Feb 15, 2013)

Chopera said:


> Where did you get that from?


Taxation of rental properties in Spain


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## CapnBilly (Jun 7, 2011)

Chopera said:


> Where did you get that from? If they are talking about tax deduction then I guess it means you can deduct 50% from your tax bill if you rent to people rather than businesses - which seems very generous.


Actually theres a 60% reduction now. It was 50%, but i think they changed it about 2 years ago. Also, its a100% if the tenant is under 30, and is below a certian income level. Thus us a google transkation

1. ° In cases of leases of immovable property for housing, net income calculated in accordance with the provisions of the preceding paragraph shall be reduced by 60 percent. Case of positive net income, reduction will be applicable only in respect of income declared by the taxpayer.
Two. º This reduction will be 100 percent when the lessee has an age between 18 and 30 years and a net income from employment or economic activities in the tax period in excess of public income indicator multiple effects.


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## Pazcat (Mar 24, 2010)

But this is not the Hacienda taking 50% of rental income though, is it?

I think that's what was being referred to in earlier posts.


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## Chopera (Apr 22, 2013)

zenkarma said:


> Taxation of rental properties in Spain


It'd not very clear and it's the first time I've heard of it (which of course doesn't mean it's not true). Normally when talking about tax deductions people talk about reducing the tax bill by claiming for things like expenses, i.e. deducting from the tax bill. I don't read it as saying you have to pay 50% tax.


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## zenkarma (Feb 15, 2013)

Chopera said:


> I don't read it as saying you have to pay 50% tax.


I didn't said you had to pay 50% tax and I didn't interpret it in that way either. I said they will tax 50% _of the_ rental income. In other words you will be liable to tax on half your rental income. Not tax you 50% _on the_ rental income.

Subtle difference I know, but it does change the meaning.


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## Chopera (Apr 22, 2013)

zenkarma said:


> I didn't said you had to pay 50% tax and I didn't interpret it in that way either. I said they will tax 50% _of the_ rental income. In other words you will be liable to tax on half your rental income. Not tax you 50% _on the_ rental income.
> 
> Subtle difference I know, but it does change the meaning.


Yup - I incorrectly read your post a different way, but I understand what you mean now.


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## Chopera (Apr 22, 2013)

So to be clear, if I make say €5000 profit on a rental this year, they will only apply tax to 40% of it, i.e. €2000. So if, for arguments sake, I'm in a 40% income tax band I'll end up paying 40% of €2000, i.e. €800 altogether? Which works out as 16% of the €5000 profit I made. Not bad. And I might not pay any tax at all for tenants less than 30? So where's the catch? (Or does that come later?)


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## zenkarma (Feb 15, 2013)

Chopera said:


> So to be clear, if I make say €5000 profit on a rental this year, they will only apply tax to 40% of it, i.e. €2000.


That as I understand it yes.

By profit I assume you've already taken away the allowable deductions and allowances to offset against tax and the €5,000 is what's left.



Chopera said:


> So where's the catch? (Or does that come later?)


The catch is as you mentioned earlier. Spanish rental laws favour the tenant and not the landlord and they've imposed more severe restrictions on short time holiday rentals.

I wonder if the extension to 60% deductible has helped release more long term rental properties onto the market? I'm curious as to why the Spanish government would make it more attractive to rent a property than buy one in this current market.


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