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Property tax shock for British expat landlords in Spain
| Published: | 31 Oct at 6 PM |
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Brit holiday home landlords with properties in Europe are in for an unpleasant tax shock once Brexit finally kicks in.
Many thousands of British would-be expats who’ve purchased holiday homes in preparation for retirement and are letting them out in the meanwhile are to be hit with increased property taxes once the UK leaves the EU. Worst hit will be those with properties in Spain, the favourite destination for British visitors due to its laid-back lifestyle and established expat communities.
At present, British expats pay local income tax as well as capital gains tax charged at the same rate as Spanish citizens, but all will be charged non-resident tax rates from the day the UK quits the EU. The present rate stands at 19 per cent, but will increase to 24 per cent, and expat owners will no longer be allowed to offset business expenses against rental gains. Spanish tax is paid quarterly if homes are rented out, and capital gains tax will need to be paid in Spain as well as in the UK.
For Britons hoping for a reprieve should a new Brexit deal be negotiated, it should be noted that taxes on gains and incomes have not been included in Boris Johnson’s withdrawal agreement, although the status quo is expected to be kept for the transition period, thus giving expat rental property owners time to decide whether to sell up or not. The same rules will apply post-Brexit to all British owners of properties in Europe, whether they’ve been purchased as a long-tem investment, as a buy-to-let or as a retirement home some time in the future.
Many thousands of British would-be expats who’ve purchased holiday homes in preparation for retirement and are letting them out in the meanwhile are to be hit with increased property taxes once the UK leaves the EU. Worst hit will be those with properties in Spain, the favourite destination for British visitors due to its laid-back lifestyle and established expat communities.
At present, British expats pay local income tax as well as capital gains tax charged at the same rate as Spanish citizens, but all will be charged non-resident tax rates from the day the UK quits the EU. The present rate stands at 19 per cent, but will increase to 24 per cent, and expat owners will no longer be allowed to offset business expenses against rental gains. Spanish tax is paid quarterly if homes are rented out, and capital gains tax will need to be paid in Spain as well as in the UK.
For Britons hoping for a reprieve should a new Brexit deal be negotiated, it should be noted that taxes on gains and incomes have not been included in Boris Johnson’s withdrawal agreement, although the status quo is expected to be kept for the transition period, thus giving expat rental property owners time to decide whether to sell up or not. The same rules will apply post-Brexit to all British owners of properties in Europe, whether they’ve been purchased as a long-tem investment, as a buy-to-let or as a retirement home some time in the future.
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