Tax on Renting a Property

Hello,

A few questions about taxes on renting a property...

1) What % tax has to be paid if an owner (English but with a residency) rents his/her property at €500 a month?

2) Does this percentage change if the owner is classed as non-resident (i.e. out of the country more than 183 days a year)?

3) Can the owner be classed as resident if he/she has an up-to-date residencia (green certificate), is in Spain more than 183 days a year but doesn't earn any income apart from the rental amount?

4) If all of the rent money (€500) goes towards paying a mortgage which costs more than €500 a month (for example €525), will this cancel out the money made which could be taxable?

5) Can any other expenses be offset against the amount of rent taxable, for example the yearly I.B.I., basura, community fees, gestoria fee at the start of the contrsact, etc?

Many thanks for your time in answering these questions.

Hi Chicadeb

I have put forward your questions to our tax specialist, and these are the answers.

1. The rental of your property should be declared on the Personal Income Tax that is filed yearly, and the percentage to be paid on it depends on the personal situation of the owner ( age, marital status, children, etc..)
2. Yes, it does. As a non resident you declare rental income (24%) using form 210 within a month of receiving the rent.
3. Yes
4. Interests and financial expenses of the invested capital in the acquisitoin of a dwelling or for the improvement of the same, is tax deductable for residents. However,not for non residents, though there is new Law that will apply for the year 2010 that may make variations in this regard.
5. You will be able to offset 100% of all expenses if you are a resident. If you are a non-resident you can also offset 100% of all expenses in your yearly tax declaration. In the event you are a non EU citizen, no expenses can be offset.

Regards,