Filed under : Civil Law, Conveyancing & Property Law, Events, Property

A number of British and other foreign residents have returned to their home countries to find work or for health or social reasons. Many want to keep their Spanish property rather than selling in a buyer´s market. Although the price of property is recovering renting the Spanish property can bring a steady income which covers the running costs and in some cases pays part or all of a mortgage. Standard rental contracts can be purchased off the peg but it is wise to get some advice on the law on Urban rentals so that you don´t have any surprises.

The best way of avoiding a dispute is to have a formal contract tailored to your particular situation. For example a short-term contract of 6 to 11 months is better if you don`t want to be obliged to extend the contract term to 3 years and a further 1. However a tenant who can show that it is their principal residence or “home” and that they have been in the property for a continual period of a year or more can contest the continual granting of “short-term” contracts. If however you are a landlord and need to return to the property to live on a permanent basis you can give 2 months’ notice to quit to the tenant.

Another possibility is that you are trying to sell the property and may require access for viewing by potential purchasers. This needs to be very clearly put in the contract to avoid any problems. A one month deposit is normal in rental contracts and tenants normally pay for utilities.

As a landlord is very important to have Civil Responsibility insurance and to specify that you want this to cover a rented property.

For non-tax residents who rent out property taxation of 24.75% is levied on rentals. A form 210 needs to be completed if you are a non-resident Spanish property owner. This can be entered quarterly and if you are joint owners each owner you must both submit this form. If you are tax resident in the UK and declare the rental in the UK you can make a double tax claim to ensure you are not paying twice and relief will be given equal to the Spanish tax paid or the UK tax liability which is the smaller.

Tax residents need to declare rental on property other than their home. This needs to be declared on your annual return. There are generous allowances and many expenses are deductible and accountants can advise on this aspect of rentals.

There are a number of ways the tax authorities are catching up on undeclared rentals such as tying up changes in utilities with ownership of properties as this can show the existence of an undeclared rental contract.

For more information on any aspect of property law or other legal matter, please contact your nearest De Cotta Law Office for a private consultation. Offices in Mijas/Calahonda, Coin, Nerja and Tenerife. Tel: 952 931 781