Owning a home abroad can sometimes be a challenge.
Not only do you have to look after the property and organise any rentals and services from afar, you also have to understand all the relevant financial implications of your purchase.
HomeCareontheWeb can not only assist you with your Property Care and Rentals Management needs – but we can also help you get the best financial and tax advice through our various expert partners.
Here’s some important information for you about:
There are a number of ways to transfer money from your home currency into Euros in Spain with the traditional way being a bank transfer, but bank transfers can be very costly. We can recommend some well known money transfer companies such as www.moneycorp.com or www.currenciesdirect.com where can save you money on regular or large transfers.
Download our free guide to Spanish Tax provided by the Perez Legal Group
Paying your tax in Spain
Completing Tax Returns in Spain can be costly. Most lawyers and accountants charge around 150€ or more per submission. Many companies do not even want to take the job on with the main reason being the tight deadlines involved.
If you rent out your property, you should be submitting quarterly tax returns. Where applicable, these have to be completed and submitted by 20th of the following month after the period end. (For example, for the quarter 1st January to 31st March, the deadline is 20th April). If you live in the EU, you can offset eligible expenditure including:
- Interest on mortgage payments
- Community fees
- Property Management Fees
- Cleaning charges
- Maintenance charges – including pool and gardening
- Depreciation (at 3% of the Valor de Construction)
Note all of the above must have valid invoices to support them.
However you can in fact complete your own Tax Return.
If you are a HomeCareontheWeb client we can help you with our easy to follow step by step guide.
Please note: Income from renting out your property in Spain MUST BE declared in Spain.
If you own a Spanish property and you wish to pass it to your spouse, children or a partner when you die it is vital that you make a Spanish will, in addition to your English will.
The law in Spain is very strict regarding inheritance and if you die without a Spanish will, two-thirds of the estate will go to your children and only one-third to your surviving spouse. However, as a foreigner you are able to decide how you want to split your inheritance as the English law applies, but your wishes have to be contained in a Spanish will.
This is an important matter and must be done using the services of an experienced lawyer with an understanding of both the Spanish and English systems. Once you and your lawyer prepare the will, you need to go to the Notary and have the will witnessed.
Making a simple Spanish will is not normally that costly but makes it much easier for your loved ones if you pass away. Think about doing it today!
Understanding Inheritance Tax
Inheritance tax is a huge concern for anybody who owns property in Spain. It is a vast subject which we can’t explain in complete detail here, however here are some key facts to help you understand the process and the amount you may have to pay.
- The individual recipient is taxed rather than the ‘estate’ of the deceased.
- There is no ‘spouse-to-spouse’ tax free allowance. For example, where both spouses are resident in Spain, if the husband dies the wife can be fully liable on the worldwide assets she inherits from her husband, subject only to the allowances and reliefs available in Spain.
- If the couple are living together but are unmarried, the tax due is even higher and could be at least doubled.
- Ex-pats who are resident in Spain are liable to pay Spanish Inheritance tax regardless of the country in which their ‘estate’ is situated.
- Non-residents are liable to pay Inheritance Tax in Spain only on assets which are physically located in Spain.
- If you own a property and it has been your primary residence for more than 3 years the recipient of the inheritance may qualify for a tax free allowance.
We recommend you obtain expert advice on this complex subject as everybody’s circumstances are different.