2nd house in UK

Hello,we have bought a house in Quesada and will be moving there in April ,the house we are leaving in the UK will be rented to provide additional income ,tax will be paid in the UK ,so the question is.Will we be liable for Spanish tax on that income once the the property has been declared as an asset to the Spanish government.?

Short answer is yes, eventually.
Once you have been resident for more than 180 days in any 12 months, Spain considers you resident for tax which includes income & assets abroad. However the UK & Spain have a taxation agreement which should allow you to prevent double taxation, but the onus is on you to sort it properly and provide any proof.
There is so much mythology around this taxation that you should get advice and assistance from a qualified Tax Advisor and not rely on input from forums and people like myself
Spain, like the UK are desperate to get in more taxes and are getting ever more diligent in tracking down those under the radar that may have avoided taxes in the past.

The first thing to say is that, theoretically, you will be tax resident in Spain during 2019, you would be liable for any income in Spain during 2020, and complete your first Spanish tax return in 2021 based on that income. You would also declare your UK house as an asset over 50,000€ using modelo 720 before April 2020.

If you have no other taxable income in UK other than your rental income, then your personal allowances, yours and your significant other?, would probably mean that you would pay very little, if any UK tax.

When you declare your UK rental income on your Spanish tax return they will only tax part of it as Spain considers that you are doing a public service for providing a roof over someones head. Any tax that you have paid in UK will reduce the amount due in Spain owing to the dual taxation agreement between UK and Spain.

My wife and I have a UK property that we let, but we also have government pensions that are only taxable in UK. This means that we pay tax in the UK, on the whole of our UK rental income as our government pensions use up all our UK personal tax allowance. This means that we pay no Spanish tax on our UK rental income as we paid more in UK than would be due in Spain.

As I have no Spanish income, other than a bit of bank rebate for having direct debits, I pay no tax in Spain. My wife´s UK old age pension is taxable in Spain and so we file a joint return so that it reduces the tax due on that.

I have been doing my own tax returns here in Spain for 5 years, and In UK I worked in the accountancy field filing self assessment returns for my clients.

Espanabums wrote:The first thing to say is that, theoretically, you will be tax resident in Spain during 2019, you would be liable for any income in Spain during 2020, and complete your first Spanish tax return in 2021 based on that income. You would also declare your UK house as an asset over 50,000€ using modelo 720 before April 2020.

If you have no other taxable income in UK other than your rental income, then your personal allowances, yours and your significant other?, would probably mean that you would pay very little, if any UK tax.

When you declare your UK rental income on your Spanish tax return they will only tax part of it as Spain considers that you are doing a public service for providing a roof over someones head. Any tax that you have paid in UK will reduce the amount due in Spain owing to the dual taxation agreement between UK and Spain.

My wife and I have a UK property that we let, but we also have government pensions that are only taxable in UK. This means that we pay tax in the UK, on the whole of our UK rental income as our government pensions use up all our UK personal tax allowance. This means that we pay no Spanish tax on our UK rental income as we paid more in UK than would be due in Spain.

As I have no Spanish income, other than a bit of bank rebate for having direct debits, I pay no tax in Spain. My wife´s UK old age pension is taxable in Spain and so we file a joint return so that it reduces the tax due on that.

I have been doing my own tax returns here in Spain for 5 years, and In UK I worked in the accountancy field filing self assessment returns for my clients.

Can I clarify something - If one arrives in April 2019 and becomes permenantly resident (after 183 days in 2019) then isn't it the case that one then becomes liable for any worldwide income during 2019 (the year one become a tax resident) ?
I ask because I was told by a Spansh based tax consultant NOT to move to Spain until after 1st (ish) July 2019 otherwise I would become liable as a tax resident in 2019 for income I will have acrrued in 2019. i.e. I was told that moving after July 1st 2019 meant I would not become a Tax resident until 2020 and so would submit my first tax return in 2021. Hence, we are delaying our move until July/August 2019.

Paul1000 wrote:Can I clarify something - If one arrives in April 2019 and becomes permenantly resident (after 183 days in 2019) then isn't it the case that one then becomes liable for any worldwide income during 2019 (the year one become a tax resident) ?
I ask because I was told by a Spansh based tax consultant NOT to move to Spain until after 1st (ish) July 2019 otherwise I would become liable as a tax resident in 2019 for income I will have acrrued in 2019. i.e. I was told that moving after July 1st 2019 meant I would not become a Tax resident until 2020 and so would submit my first tax return in 2021. Hence, we are delaying our move until July/August 2019.

First, you do not become permanently resident after 183 days, you become tax resident, and this is only 1 way to become tax resident in Spain. Whilst it is true that you become tax resident before the year end if you arrive in April, Spain does not do split years for tax and so, I believe, your taxable income does not start until January 1 2020.

One thing to take into account in UK is that your tax allowance runs for the full 12 months, April to April, so if you pay your UK taxes by PAYE, then you will be due a tax refund of 20% of the unused portion of your tax allowance.

I believe I read somewhere that if you rent a house then 60% of the income is tax free you only pay tax on 40% and this will be after any deductions for maintenance etc however I am sure one of our fellow forum users will be able to nenlighten us.

I think you're wrong there, espanabums. You are confusing the 6 month rule which applies if you don't take out residency but overstay the limit.
If you move to Spain in the first half of the year with the intention of becoming resident then you will be classed as tax resident in Spain for the entire year. If you move in the last 6 months, again with the intention of becoming resident, you will be classed as resident in UK but non-resident in Spain.

This from Blevin Franks
So, if you move to Spain part way through the tax year, the date from which you become resident in Spain largely depends on when you arrive. If in the first half of the year, and you intend to stay indefinitely, you are likely to be regarded as resident in Spain for the full year. However, if you moved directly from the UK, then it is likely that, under the UK/Spain Tax Treaty rules, you will be regarded as UK resident up to the date you leave the UK and resident in Spain thereafter.

If you move to Spain in the latter half of the calendar year, you will probably find you are regarded as non-Spanish resident during that year, assuming you have not spent 183 days there. However, this depends on previous visits made to Spain, and if these have been significant or frequent, the Spanish authorities could deem you to be resident in Spain from an earlier date.

The "intention" is also referred to on other sites dealing with tax residency.

This 183 days thing is often misinterpreted as is the waiting for 6 months before you take out residency.

As I understand it, if one becomes a tax resident in Spain having resided in Spain for more than 183 days in a calendar year, then they become liable for tax in Spain (subject to allowances) on any/all worldwide income.

I further understand that UK government pensions aside, as these are taxed in the UK specifally as previously mentioned, any other income from renting out a property in the UK (or any other income from UK or any other country) should, in theory be declared and taxed in Spain if one is a tax resident in Spain.

This then demonstrates that what's really important is that one seeks proper qualified financial advice on one's individual circumstances because Spanish taxation in particular is complex and may not always be being applied evenly.

Paul1000 wrote:
This then demonstrates that what's really important is that one seeks proper qualified financial advice on one's individual circumstances because Spanish taxation in particular is complex and may not always be being applied evenly.

It is perfectly true that the caveat of seeking professional advice is the ultimate no blame attached answer to all matters financial.

However, this is a discussion forum and people who are former professionals give their advice to those asking questions to the best of their abilities. There are a huge number of people paying taxes in Spain and or UK, whose tax affairs are perfectly straight forward, and IMHO do not need specialist costly advice. They only wish to know how much they are likely to pay.

By all means use a gestor to help you fill in your tax returns or even the tax people themselves, they will do it free of charge.

There are some very knowledgeable members using this forum and they would not knowingly lead people astray.

Don't get hung up on this 183 day thing. That's the maximum time you can spend in Spain without becoming tax resident and applies equally to residents and non-residents.
However, if it is you intention to remain in Spain and become fully resident then you become liable to pay taxes in Spain from the day you arrived (although this is generally taken from when your residency is dated). You don't have 183 days and then take out residency.
It's the same with cars and people will tell you it can be kept for 183 days without being re-registered. That is also wrong as, if it is your intention to become resident and keep the car in Spain, the re-registration process is to be started within 30 days of arrival (30 days more than you get in UK, by the way).

Also, the government pension thing. Yes, it is only taxed in UK. However, it has to be declared on your annual tax return in Spain and is added to any other income (such as private pensions or state pensions) and the tax percentage you pay is based on that total income. You will not pay tax on the government pension but you may be charged more on the other income if it puts you in a higher tax bracket.

But, as said, get a good gestor or solicitor who knows what they are doing. Some of them seem to get the office junior to complete the returns and many mistakes are made.