If you let a second
home, tax is payable only on 50% of
the net letting income (rental income less
deductible costs). Deductible expenses are
those expenses necessary to produce rental
income such as property tax (IBI), repairs
(not improvements), maintenance costs, agents’
commissions, loan interest and 3% depreciation
against the property cost.
Your contributions
to a qualifying pension scheme (qualifying,
that is, for Spanish income tax purposes).
If you are under 52, these contributions are
deductible with a limit of €8,000. If
over 52, the money limits increase substantially,
depending on age from 52 to 65, increasing
on a sliding scale to a maximum of €24,250
at age 65.
There are other kinds
of deductions, deducted not from the
taxable income but from the figure of “gross”
tax which is worked out using the sliding
scale noted in the third point above. Perhaps
the most important are deductions relating
to mortgage payments on your main Spanish
home (with limits), and there are (of course)
final deductions for previous payment of Spanish
taxes, if you have paid these, or had them
deducted (e.g. UK tax deducted from any UK
income you have).
Property Letting for Spanish Non-Residents
A non-resident
is taxed in Spain on income arising from
Spanish property at the rate of 25% on gross
income without any deductions of expenses
or interest costs. It is the tenant who
has an obligation to file a tax return and
to pay the 25% to the Hacienda (tax office).
The tenant should have withheld 25% from
the rent payment to the non-resident landlord.
The landlord
must ask for a copy of this return in order
to prove that the tax has been paid, and
it will also be required as evidence of
overseas tax paid for any double tax claim.
The rental income remains liable to UK taxation
but any Spanish tax paid can be deducted
against any UK tax liability.
Lottery
winnings and Premium Bonds
A Spanish tax resident is exempt
from Spanish income tax on winnings from
the Spanish National Lotteries (of which
there are various types), including the
Spanish Red Cross Lottery.
However, there is no exemption from Spanish
income tax on winnings from other countries,
such as the UK National Lottery or UK Premium
Bonds. These are indeed taxable in Spain.
The UK National Lottery is, technically
speaking, only open to residents of the
UK.
Source:
BlevinsFranks
See
also
Spanish
Wealth Tax
Spanish
Capital Gains Tax
Spanish
Inheritance and Gift Tax
Residency
Scope
of Spanish Tax
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