Spanish Inheritance Tax.

Irrespective of the present existence of a discrimination between  resident and non residents as to the payment of the inheritance tax, mention to  this was made previously on this bloq, we would like to give you certain clues to minimise the tax taken the  present regulations.

At this stage in the case of real estate in Spain owned by a non-Spanish resident, the State rules will always apply on the death of the non-resident owner.  The tax will be calculated on the  market value of the property at the time of the death and the rate ranges between 7,65 % and 34 %. Depending on the relationship with the deceased there is a certain  amount on which no tax is due, which is approximately 16.000 Euros in case of spouses and descendants.

Therefore it may convenient to leave your property to more than one heir, because apart from the amount tax exempt,   the  tax scale is applied to each heir individually  starting alsways at 7,65 % for the first  part of the   value of their estate to be received.

Also  taken into account that the value of the property can be divided between the value of the life interest ( which will depend on the age of the user )  and the mere ownership, you could also  consider leaving the life interest of the property to  a person ( for example spouse ) and the mere ownership to  the  descendants. This normally will reduce the inheritance  tax  to be paid for the surviving spouse  and  the  descendants (final heirs ) will be paying the tax in two phases.

For more information or an appointment please contact us on (0034) 952 822 321 or admin@nonresidenttaxesinspain.com. 

Web: www.nonresidenttaxesinspain.com

No luck when renting out your property in Spain

The always increasing expenses of the property abroad (community, local rates, income tax ) has made a lot of non residents decide to  rent out the property and receive an income to reduce their costs. If a property is let the non resident  will be  liable to the payment of income tax on the rent received ( 24,75 %) . For property owners from the UE certain expenses can be deducted when working out the tax to be paid.

However, before renting out it is very important to  make  certain enquiries and about, the agency handling the agreement,  the terms of the letting contract and the circumstances of the tenants as otherwise this may turn into a great problem and unexpected costs,  if finally the tenant does not pay the rent.

If  you are in this particular case and you are not receiving the  agreed rent , you should react quickly and not wait until circumstances may improve, as this normally does not occur. If after having claimed by recorded delivery  the payment of  the unpaid rent to the tenant, there is no reaction  , you should instruct the presentation of a lawsuit to claim the payment of the rent due  and eviction of the tenant. The court will give the tenant 10 days for payment and simultaneously set a date for eviction. The tenant  will be only able to avoid the eviction if he pays  the outstanding rent or   opposes to the  claim presenting valid arguments.

In principle this should be a straight forward process and the  landlord can even claim the legal fees  paid in connection with the lawsuit from the tenant. However,  we should admit  that if  no rent was received,   the possibility to be reimbursed the legal costs will not be very  high.

For more information or an appointment please contact us on (0034) 952 822 321 or admin@nonresidenttaxesinspain.com. 

Web: www.nonresidenttaxesinspain.com

Spanish Tax Update 2014 for Non Residents

For this year 2014   in general terms the  same tax rates are applicable  as in 2013 for non residents which means that the tax rate for income tax remains at 24,75 %  which will be applicable in case of rental of property or  use of your own property and if you decide to sell  your  property  in Spain the capital gains tax  to be paid  is still  21%.

Also  for those you who have to present a non resident Wealth tax declaration (owners with a net asset value exceeding 700.000 Euros ) , which was temporarily set only  for the years 2012 and 2013,   this obligation has been extended to this year 2014  and , if required the corresponding Tax assessment declaration has to be presented in 2015

There is another  item  which affects non  resident which is that  the rateable value (valor catastral)  this year will vary  in some cases depending on the  year when the last  revision of the rateable value   took place  in  the  municipality. The increase starts at 13 %  and goes down to   6 % for  those locations where the tax revision took place between 1984 and 2003. What is new is that there are certain places where the  ratable value could even  go down (85 % to  73 % of the 2013 value) . This is applicable to  places where the revision took place  between 2006-2008 and there is a big difference between the market value used at the time to establish the rateable value  and the  present value of the properties.  The  change of the rateable value will  affect you  as this is used to work out some of the taxes to be paid annually by the non residents i.e. , income tax  for own use of property , local rates, etc.

For more information or an appointment please contact us on (0034) 952 822 321 or admin@nonresidenttaxesinspain.com. 

Web: www.nonresidenttaxesinspain.com