Larraín Nesbitt Lawyers is a Marbella-based independent law firm specialized in property conveyancing, taxation, litigation, probate and succession. Expert native English-speaking lawyers and economists blend legal and practical advice providing tailored assistance on your matter. Our range of services cover the greater Marbella area, Sotogrande and Costa del Sol.


The firm focuses advising foreign investors on acquiring residential property in Spain both from a legal and fiscal point of view. Our no-nonsense approach to business coupled with our commitment to clients ensures easy-going transactions. We pride ourselves in putting our clients’ interests at the forefront of everything we do.


Larraín Nesbitt Lawyers, your legal partner in Spain.

Last Article:

Buy-to-Let: Landlord’s tax reliefs

Raymundo Larraín Nesbitt, August, 1. 2022

Lawyer Raymundo Larrain explains how non-resident BTL landlords can GREATLY benefit from tax allowances dramatically reducing their landlord tax bill (on average by 70%, or more).

Marbella-based Larraín Nesbitt Abogados (LNA) has over 19 years’ taxation & conveyancing experience at your service. We offer a wide range of 50 legal and corporate services. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain.

You can review here our client’s testimonials.

Article copyrighted © 2022. Plagiarism will be criminally prosecuted. 

 

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8th of August 2022

Introduction

August. It’s again that month of the year when everyone is enjoying their holiday break and landlords in Spain are – once more – making a killing through rental income.

Have you tried booking a flat for July, August, or September? Sorry, all taken!

One of the best, if not the best, business in Spain over the last 7 years has been to buy a property with a view to rent it out (buy to let), specifically as a holiday home (short-term).

Property prices in Spain have strongly rebounded post-pandemic (since 2021). We are witnessing an annual capital appreciation of 8.5% for resale property across the board and over 10% for new builds (off-plan). In coastal areas, and large Spanish cities, it’s actually a two-digit property rise! Bottom line, property prices have risen in Spain for 12 consecutive months reaching all-new highs!

In addition to the above, rental yields are also growing by two digits year-on-year. Long term lets offer a net yield of 4.5% per annum. Short-term rentals (holiday homes) are far more profitable, delivering a two-digit return.

Spain ranks as the world’s second tourist destination, trailing only behind the United States of America, with over 84 million tourists a year. The strong demand for tourist accommodation in Spain grows every year, pushing up home prices. The prospect of investing in Spain looks brighter than ever.

Pro-tip: The combination of both capital appreciation and soaring rental yields translates into a combined yield of over 10% per annum! No other safe investment offers such high returns.

Spanish real estate is poised for combined two-digit gains over the next year, interest rate fluctuations notwithstanding, easily trumping alternative investments (bonds, commodities, cryptocurrencies, gold, etc) and paltry fixed returns in a context of historic ultra-low interest rates.

But wait, it gets even better!

Now that I have made a case on why buy-to-lets are indeed an excellent investment in Spain, I want to focus mainly on the HUGE tax advantages open to all non-resident landlords. Read on.

Tax deductions available to all non-residents apply to both short-term rentals (holiday homes) and long-term rentals

Non-resident landlords can take advantage of huge tax breaks on their landlord tax bill.

In plain English, landlords can expect to reduce their tax bill by 70%, or more, on filing their quarterly rental income tax using our accountants.

Please be advised that to take full advantage of the below-listed tax allowances you need to instruct a specialized accounting firm – such as us – with over 20 years experience in non-resident taxation. Irresponsibly self-filing tax returns, without taking proper tax advice, leads to costly mistakes with huge fines being levied.

2022 non-resident tax calendar

You must file a tax return in Spain if you rent out your property in one of the below tax quarters:

  • Q1: January – March.
  • Q2: April – June.
  • Q3: July – September.
  • Q4: October – December.

Requirements

In order to benefit from generous landlord tax relief, three requirements must be met:

  • Landlord is tax resident in the European Union or EEA (your nationality is irrelevant).
  • The expenses you claim are in direct relation towards the upkeep of the property (see tax relief list below) i.e. claiming travelling expenses would be excluded.
  • You store VAT invoices to back up your tax relief claim.

Landlord tax relief

As an example, non-residents in Spain may deduct the following expenses from their quarterly tax returns (open list):

  • Interests arising from a mortgage loan (to buy the property).
  • Local taxes and administrative charges and surcharges.
  • Expenses arising from formalising lease agreements.
  • Maintenance costs may be offset; however, refurbishment expenses (improvements) are excluded (but may be claimed on selling the property to dramatically reduce the seller’s CGT bill).
  • Community of owners’ fees.
  • Home insurance premiums.
  • Property repairs: plumbing, roof retiling, painting, pool pump etc.
  • Utility invoices: electricity, water, gas, internet, and landline.
  • Cleaning.
  • Concierge, gardening, alarm & security services (i.e. gated communities).
  • Lawyer’s fees: are 100% tax-deductible! Yes, our fees are also tax-deductible. I.e. to calculate and submit you quarterly tax returns.
  • Property management fees.
  • Advertising invoices from property portals, such as Idealista: online/offline.
  • Marketing expenses.
  • Home depreciation and amortization.
  • Etc.

 

Conclusion

Our clients are reducing their tax bills on average by 70%, or more, every tax quarter on renting out in Spain through us. 

Call or e-mail us, our friendly staff will be delighted to guide you through the procedure and explain how we can assist you by greatly reducing your tax bill.

These taxes are filed online nationwide. So, regardless of where your property is located in Spain i.e. Mallorca, Marbella, Barcelona, Valencia, Madrid, Sotogrande, etc, we can file them for you at a very competitive fee:

  • EU resident: 125 euros plus vat
  • Non-EU resident: 75 euros plus vat

To close, a gentle reminder that our accounting fee is tax-deductible!

If you want to pay less tax, please contact us.

We offer this accounting service:

Holiday Rental Accounting Service (HRAS)

Larraín Nesbitt Lawyers, small on fees, BIG on service.

Larraín Nesbitt Lawyers is a law firm specialized in conveyance, taxation, inheritance, residency, and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form to book an appointment.

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal and/or financial advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

2.022 © Raymundo Larraín Nesbitt. All Rights Reserved.

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Last Blog Entry:

Mortgage applications rises by 50% in May 2022!

Raymundo Larraín Nesbitt, August, 11. 2022

Marbella-based Larraín Nesbitt Lawyers has over 19 years' taxation & conveyancing experience at your service. We offer a wide range of 50 legal and corporate services. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain. You can review here our client’s testimonials.

Copyrighted © 2022. Plagiarism will be criminally prosecuted.

 

Mortgage applications rise by 24.7% year on year. This is the best figure in over 11 years. Only in May 44,165 mortgage loans were granted. Following the data supplied by Spain’s INE (national bureau of statistics) there has bee an accumulated growth of 50% between January and May, with 193,600 mortgage loans. The average interest applied is 2.47%.

This goes to show how Spain’s property market is living a boom with resales appreciating by 8.5% and off-plan by over 10%.

Source: Idealista

 

Related articles:

Mortgage loans: fixed or variable interest rate? – 11th March 2022

 

At Larrain Nesbitt Abogados we have over 19 years’ experience buying, selling, and renting properties. We are also specialized in immigration & residency visas. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88, or by completing our contact form to book an appointment.

Larraín Nesbitt Abogados, small on fees, BIG on service.

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. No social-communist politician was harmed on writing this blog post. VOV.

2.022 © Raymundo Larraín Nesbitt. All Rights Reserved.

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Last Press Entry:

Spanish real estate chains 12 months of continued growth!

Idealista, July, 21. 2022

Idealista is Spain's leading online property portal, ranking number one. It was recently sold for over 1.3bn euros to EQT group.

It was founded in 2000 by three partners, brothers Mr. Jesús and Fernando Encinar, and by Mr. César Oteiza. It offers millions of properties for rental and sale in Portugal, Italy and Spain.

Following Nielsen audited ratings, it has over 144 million pages visited every month, 5 million unique users, 300 employees, and an annual turnover of over €40mn.

Idealista kindly published our article in exclusivity on their website in five languages, no less!: Spanish real estate chains 11 months of continued growth!

English    French     German    Italian 

Polish     Portuguese   Romanian   Russian

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