Tax implications for owning 2 properties?

Started by alanp26, October 22, 2016, 17:17:06 PM

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Tetley

The Leader elect of the brave new western world,im just hoping he doesent have an MGB  on Brit plates as well..... :shocked:


http://www.nytimes.com/2016/10/02/us/politics/donald-trump-taxes.html?_r=0
Analogue mechanically  trained 1970,s Fitter  dear living  in a gone digital/tecno mad O Dearie me world......thankfully left behind with it all ,enjoying the bliss of NO phones ,  apps and  shortage of the intellectual, wile still managing to hone underachievement on the day to day in the sun  lol


byrney

"The above is now so complicated as to require specialist advice & /or going through it with hmrc , as I have done.

What you also have to remember is that the above Only applies for the HMRC. Just because you might appear to comply with requirements for UK taxation this in no way absolves you of declaring for spanish tax unless you have the agreement of both Hacienda/hmrc in writing.

Furthermore assuming you do comply with the above you CANNOT stay in Spain for in excess of 183 cumulative days without becoming a tax resident automatically. Just because you comply with being a tax resident in the UK doesn't mean that you can exceed 90 consecutive days in Spain, or any EU state, without becoming a "resident ", or 183 days cumulatively for tax residency. It doesn't work like that Even if you are just a holiday maker !!

& even if you are a holiday maker you are required to register as resident if here over 90 days consecutively unless you obtain a "certificate of non.residency"


Well Gus, that sums up the situation totally as far as I understand it (albeit unqualified personally, but having had qualified advice).

Unfortnuately, some people only want to hear what they want to hear, so no matter how much you tell them they will still refuse to believe it, and then when they get caught out they will blame everyone else but themsleves.

I said previously that my only intention has ever been to alert people to potential problems and suggest that they get proper advice.  If they don't do so, well, don't blame anyone else like people tend to do.



gus-lopez

#29
Quote from: Chisme on November 01, 2016, 22:58:11 PM
Quote from: John P on November 01, 2016, 22:27:59 PM
Quote from: Chisme on November 01, 2016, 22:12:54 PM
As I understand it, the dual taxation agreement ensures that individuals are tax residents in either the UK or Spain, not both: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/507409/spain-dtc_-_in_force.pdf.

But you are free to show evidence to the contrary.
I refer you to Article 14 of that document you just very helpfully posted. Although I'll agree there's a lot in the interpretation of it.
My advice is for alanp26 to get professional advice from a UK accountant.

I think you will find that article 4 paragraph 2(a) covers the point that you will only be a resident in one state, and that is automatically the state in which you own your only property. I don't think that is open to interpretation: it is unequivocal! I trust you will agree that the domestic 183 day criteria, which you referred to, is irrelevant in these circumstances?

By all means seek professional advice: HMRC are the obvious ones to speak with, and they should confirm the references already given.

No it isn't . Article 4 ,2   ( a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the  State with which his personal and economic relations are closer (centreof vital interests);

A " permanent home " does not mean one you own. It means one that is available to you whether owned, rented, or one that your children own .or one which you have  just use of for 91 consecutive days in any year .
You can only be a resident in one state ,yes, but you can be a tax resident in more than one. Also , as your link states you can be resident of two or more states or of none.

Additionally each time you exceed 90 consecutive days in one state or the other you automatically become a resident under EU rules, regardless of whether you register or not. That is a "resident " , not a tax resident. They are 2 different things. You can actually be tax resident in one country whilst a resident of another & vice-versa.

Also 90 day out of the UK & you have no right to healthcare /ehic etc; regardless of whether you own property, pay council tax, income tax & national insurance.

Statutory Residence Test: Key components
There are four essential components to the Statutory Residence Test:

How much time you have spent in the UK in a tax year
Automatic Overseas Test
Automatic UK Tests
Sufficient Ties Test
Then , if all else hasn't decided it "centre of economic interests"

This is after you've checked with the "deeming rule" if you've left in last 3 years.

You cannot do any of the above on their own .

The above is now so complicated as to require specialist advice & /or going through it with hmrc , as I have done.

What you also have to remember is that the above Only applies for the HMRC. Just because you might appear to comply with requirements for UK taxation this in no way absolves you of declaring for spanish tax unless you have the agreement of both Hacienda/hmrc in writing.
Furthermore assuming you do comply with the above you CANNOT stay in Spain for in excess of 183 cumulative days without becoming a tax resident automatically. Just because you comply with being a tax resident in the UK doesn't mean that you can exceed 90 consecutive days in Spain, or any EU state, without becoming a "resident ", or 183 days cumulatively for tax residency. It doesn't work like that Even if you are just a holiday maker !!
& even if you are a holiday maker you are required to register as resident if here over 90 days consecutively unless you obtain a "certificate of non.residency "



Tetley

#28
Well if folks want Gospell on both Systems, accounts  will be like law were yer need to be quallified in both UK & Spain...... wich could be a very tall order in any trade on that one....so folks may have to use a not so gospell,till they find a megga money qualified in both systems bod.

chisme to me looks like they ,he,she has done a bit of homework and knows there stuff,they,he,she,does  just seems to be offering posative leads for folks to research,infact the last HMRC link was very helpfull, infact yer never know,he,she,they may even be a propper acountant just offering off the job,in retirment genral help to point folks in the right direction.

:tiphat:
Analogue mechanically  trained 1970,s Fitter  dear living  in a gone digital/tecno mad O Dearie me world......thankfully left behind with it all ,enjoying the bliss of NO phones ,  apps and  shortage of the intellectual, wile still managing to hone underachievement on the day to day in the sun  lol


Karen4

Cl3880


byrney

Exactly Donna.  I have not for one minute suggested that people should not use the Forum to share their experiences.  Indeed, that is one of the many benefits of having a Forum like ours.

The danger is though, that some people take as Gospel advice given by people (myself included) who may or may not be qualified to give that advice.

My postings have simply been to ensure that people make decisions based on fact as opposed to general chit chat on the Forum, and get proper advice.

musicdonna

Quote from: byrney on November 04, 2016, 15:23:24 PM
Cgisme - the advice of a tax professional rather than possibly inaccurate advice on the Forum.

I was not being negative.  I am just being concerned for people who may well be digging themselves a whole heap of trouble in the future.  If advising caution is wrong, then I give up.

I would agree completely with Byrney.  Tax laws change with the wind!  Qualified and reputable lawyers have to be aware of these changes.  Having said that, having a good read of people's experiences gives a good and useful overview and raises some specific questions you might not have thought of asking.


byrney

Cgisme - the advice of a tax professional rather than possibly inaccurate advice on the Forum.

I was not being negative.  I am just being concerned for people who may well be digging themselves a whole heap of trouble in the future.  If advising caution is wrong, then I give up.


guest4538

Quote from: byrney on November 03, 2016, 23:38:44 PM
"It's simply a matter of arranging your affairs sensibly so that you pay taxes in the UK rather than Spain. And one option to consider is renting rather than buying in Spain: what's your difficulty with that?
I can see no point buying in Spain when you can afford a property in the UK. Renting should remain relatively cheap in Spain with so many illegal properties and owners desperate to return to the UK. By renting, and returning for just a month/year, you can continue paying taxes in the UK but enjoy the Spanish sunshine: what could be better?"
I have absolutely no problem whatsoever with what you are saying.
When the Taxman (from either Spain or the UK) cometh - HE will be the ultimate arbiter of what you are saying.
My simple advice again is - seek the advice of a professional.

Byrney,

Why are you so negative? Why do you keep falsely accusing people of cheating the system over tax and car use?

If you want to help the debate, why not tell people who these professionals are you keep recommending? What qualifications would they need to satisfy your criteria for being a professional in the field of dual taxation agreements? HMRC have already been recommended, since they manage the systems from the UK end: who are you recommending? Who, for instance, should people approach in Spain for unequivocal advice on the subject?

Please offer some practical advice, rather than constant criticism!

byrney

"It's simply a matter of arranging your affairs sensibly so that you pay taxes in the UK rather than Spain. And one option to consider is renting rather than buying in Spain: what's your difficulty with that?

I can see no point buying in Spain when you can afford a property in the UK. Renting should remain relatively cheap in Spain with so many illegal properties and owners desperate to return to the UK. By renting, and returning for just a month/year, you can continue paying taxes in the UK but enjoy the Spanish sunshine: what could be better?"

I have absolutely no problem whatsoever with what you are saying.

When the Taxman (from either Spain or the UK) cometh - HE will be the ultimate arbiter of what you are saying.

My simple advice again is - seek the advice of a professional.


musicdonna

Hi, alanp26,

You'll find a wealth of experience on the forum, and many people very willing to help on this and a whole variety of issues that will affect you. My personal opinion is that while accumulating facts is great, I would only act on advice from a legal professional. This is because rules here can change so quickly and what was printed yesterday might not stand tomorrow!  I've not looked at at recently, but the HMRC site used to be very informative, and might at the very least provide a starting point.  As for what will be the case in late 2018... who knows?!

Best wishes,

Donna

Tetley

#20
Quote from: alanp26 on November 02, 2016, 18:08:26 PM
Tetley - I will be retiring on a pension. By the time I move to Spain - I will be 66yrs old.

I will not need to gain any employment in Spain

Suggest you still check the medical,as our pensioners have it now ,but post Rexit could be a diffrent ball game.

(also ref Job,i meant the use of your home in spain and not working in spain )

:thumbsup:
Analogue mechanically  trained 1970,s Fitter  dear living  in a gone digital/tecno mad O Dearie me world......thankfully left behind with it all ,enjoying the bliss of NO phones ,  apps and  shortage of the intellectual, wile still managing to hone underachievement on the day to day in the sun  lol

alanp26

Tetley - I will be retiring on a pension. By the time I move to Spain - I will be 66yrs old.

I will not need to gain any employment in Spain

Tetley

#18
Im remidial maths & english,but i do ,do mi best to try and keep with with all the bright folks  :)


if you want the job for 11 months,i would suggest you wait til the free movment deal is sorted,it could get VERY Shxty for pat,s & ex pat,s as there is going to be a bun fight over Gib,wich will no doubt knock on to rights & obligations for UK  ex pats.

:thumbsup:


the other thing is,if your under 60,price your private meds now,as it will be cheaper under 60,also bear in mind it wont cover pre existing conditions. Sanitas is owned by BUPA  you should get cover for around 20e a week.
Analogue mechanically  trained 1970,s Fitter  dear living  in a gone digital/tecno mad O Dearie me world......thankfully left behind with it all ,enjoying the bliss of NO phones ,  apps and  shortage of the intellectual, wile still managing to hone underachievement on the day to day in the sun  lol

alanp26

Quote from: Tetley on November 02, 2016, 17:46:19 PM
Fing is,yell be better of renting till yer see how Head Matron May sorts the Rexit and prices are deffo going no were yer avrage SP  cit can only afford a 60/80 k loan to house buy and there will be stacks of stuff for sale by 2018 as there is now,if you only want a hols home and free movment gets binned you may get a real deal if you only want a 90day acess holiday home.

the other thing is,if yer well uk coined up at some point been fully SP , up might not suit yer needs.

:tiphat:

Took me a while to decipher this new lingo!

I'm definitely going to be staying in Spain for up to 11 months a year, and if the Lord spares my life, I will hope to repeat that scenario for a minimum of 10 years.

So I'm trying to evaluate my tax options given the above scenario

Tetley

Fing is,yell be better of renting till yer see how Head Matron May sorts the Rexit and prices are deffo going no were yer avrage SP  cit can only afford a 60/80 k loan to house buy and there will be stacks of stuff for sale by 2018 as there is now,if you only want a hols home and free movment gets binned you may get a real deal if you only want a 90day acess holiday home.

the other thing is,if yer well uk coined up at some point been fully SP , up might not suit yer needs.

:tiphat:
Analogue mechanically  trained 1970,s Fitter  dear living  in a gone digital/tecno mad O Dearie me world......thankfully left behind with it all ,enjoying the bliss of NO phones ,  apps and  shortage of the intellectual, wile still managing to hone underachievement on the day to day in the sun  lol

alanp26

Guys!

Keep your replies and comments coming!

I've found this discussion very helpful. It's making me re-consider whether I should buy in Spain or just rent. I will get professional advice. I have time to  investigate my options thoroughly. We plan to retire to Spain in the latter half of 2018

guest4538

Quote from: John P on November 01, 2016, 22:27:59 PM
Quote from: Chisme on November 01, 2016, 22:12:54 PM
As I understand it, the dual taxation agreement ensures that individuals are tax residents in either the UK or Spain, not both: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/507409/spain-dtc_-_in_force.pdf.

But you are free to show evidence to the contrary.
I refer you to Article 14 of that document you just very helpfully posted. Although I'll agree there's a lot in the interpretation of it.
My advice is for alanp26 to get professional advice from a UK accountant.

I think you will find that article 4 paragraph 2(a) covers the point that you will only be a resident in one state, and that is automatically the state in which you own your only property. I don't think that is open to interpretation: it is unequivocal! I trust you will agree that the domestic 183 day criteria, which you referred to, is irrelevant in these circumstances?

By all means seek professional advice: HMRC are the obvious ones to speak with, and they should confirm the references already given.

guest4538

Quote from: John P on November 01, 2016, 21:49:48 PM
Quote from: Chisme on October 31, 2016, 17:18:34 PM
If you want to spend more than 183 days/year in Spain, then you can avoid being a tax resident in Spain by renting rather than buying a property in Spain. Provided you own a property only in the UK, and you return to the UK for 30 days/year, you will remain a UK tax resident. This is covered by the Double Taxation Treaty which overrides Spain's domestic rules on residency determination.

In this way you avoid: the higher income tax rates in Spain; Spain's assessment and taxes on worldly assets; any capital gains tax on property; and Spain's more draconian inheritance tax laws.
Would be nice, if true.
Anyone who spends 183 days or more (cumulative) in Spain in any year (Jan 1 - Dec 31) becomes tax resident by definition.
They may also be tax resident in the UK. If they pay tax in the UK, they will still have to submit a declaraciĆ³n de renta in Spain and pay any tax due to the Spanish hacienda.
So, alanp26, don't take my word for it, get professional advice, as Byrney says.

As I understand it, the dual taxation agreement ensures that individuals are tax residents in either the UK or Spain, not both: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/507409/spain-dtc_-_in_force.pdf.

But you are free to show evidence to the contrary.


guest4538

Quote from: byrney on November 01, 2016, 20:59:45 PM
As per my initial post on this subject - seek PROFESSIONAL advice.

I have a friend who has followed similar advice to that offered by Chisme - and he is now in Court facing a HUGE bill.....

Tax avoidance is just as tricky over here as it is in the UK - unless you are a mulit-million National... :whistle:

Why on earth would you want not to pay the taxes due to you Chisme?.....



What are you talking about?

Alanp26 was asking about tax implications of dual state, dual property ownership.

Who has said anything about not paying taxes?

It's simply a matter of arranging your affairs sensibly so that you pay taxes in the UK rather than Spain. And one option to consider is renting rather than buying in Spain: what's your difficulty with that?

I can see no point buying in Spain when you can afford a property in the UK. Renting should remain relatively cheap in Spain with so many illegal properties and owners desperate to return to the UK. By renting, and returning for just a month/year, you can continue paying taxes in the UK but enjoy the Spanish sunshine: what could be better?

I think you need to read the various comments again!

byrney

As per my initial post on this subject - seek PROFESSIONAL advice.

I have a friend who has followed similar advice to that offered by Chisme - and he is now in Court facing a HUGE bill.....

Tax avoidance is just as tricky over here as it is in the UK - unless you are a mulit-million National... :whistle:

Why on earth would you want not to pay the taxes due to you Chisme?.....


guest4538

Quote from: alanp26 on November 01, 2016, 18:56:19 PM
Very interesting possibility Chisme ... can you refer me to any official web sites where I can double check out the legal intricacies?

An extract from https://www.gov.uk/tax-foreign-income/residence:

"Work out your residence status
Whether you're UK resident usually depends on how many days you spend in the UK in the tax year (6 April to 5 April the following year).
You're automatically resident if either:


  • you spent 183 or more days in the UK in the tax year
  • your only home was in the UK - you must have owned, rented or lived in it for at least 91 days in total - and you spent at least 30 days there in the tax year"

Full details here, but a bit more to read (see page 18, second automatic UK test): https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/547118/160803_RDR3_August2016_v2_0final_078500.pdf.



alanp26

If you want to spend more than 183 days/year in Spain, then you can avoid being a tax resident in Spain by renting rather than buying a property in Spain. Provided you own a property only in the UK, and you return to the UK for 30 days/year, you will remain a UK tax resident. This is covered by the Double Taxation Treaty which overrides Spain's domestic rules on residency determination.

In this way you avoid: the higher income tax rates in Spain; Spain's assessment and taxes on worldly assets; any capital gains tax on property; and Spain's more draconian inheritance tax laws.


[/quote]

Very interesting possibility Chisme ... can you refer me to any official web sites where I can double check out the legal intricacies?

guest4538

Quote from: Bilingual on October 31, 2016, 15:34:46 PM
If you live for more than 6 months in the year in Spain, than you are fiscal tax resident here. Spain checks electric and water bills to see how long you live in Spain so please be carefull with some information you get.

If you want to spend more than 183 days/year in Spain, then you can avoid being a tax resident in Spain by renting rather than buying a property in Spain. Provided you own a property only in the UK, and you return to the UK for 30 days/year, you will remain a UK tax resident. This is covered by the Double Taxation Treaty which overrides Spain's domestic rules on residency determination.

In this way you avoid: the higher income tax rates in Spain; Spain's assessment and taxes on worldly assets; any capital gains tax on property; and Spain's more draconian inheritance tax laws.


Bilingual

If you live for more than 6 months in the year in Spain, than you are fiscal tax resident here. Spain checks electric and water bills to see how long you live in Spain so please be carefull with some information you get.

guest4538

Quote from: alanp26 on October 22, 2016, 17:17:06 PM
Hi Guys! Aiming to buy a small bolt hole flat in the UK, as well as purchase a property in the Arboleas area. In due course I will become tax resident in Spain, and the Spanish property will be my main home.

Having the possibility of owning two properties - are there any tax implications that I should be aware of?

Simply make your UK home your main residence, and stay a tax resident in the UK: that avoids all the tax problems you would otherwise get as a tax resident in Spain, and there would be no capital gains tax when you eventually sell your UK home!

Carmen Torrecillas

Hello, it is very important to declare all your properties that you have outside of Spain, as the spanish Tax Office exchange information with other EU Tax Offices.
Please contact us for more advise, if you wish.
Have a lovely day!
Carmen and Marina
Cutting through your red-tape....

byrney

Get proper advice from a professional.  Do not listen to advice on here !!!!

PhillipJLloyd


Tetley

Check the HMCR website as if you have UK accoms av,it could also meck yer uk tax ressi you need propper advice.

:tiphat:
Analogue mechanically  trained 1970,s Fitter  dear living  in a gone digital/tecno mad O Dearie me world......thankfully left behind with it all ,enjoying the bliss of NO phones ,  apps and  shortage of the intellectual, wile still managing to hone underachievement on the day to day in the sun  lol

alanp26

Hi Guys! Aiming to buy a small bolt hole flat in the UK, as well as purchase a property in the Arboleas area. In due course I will become tax resident in Spain, and the Spanish property will be my main home.

Having the possibility of owning two properties - are there any tax implications that I should be aware of?