New tax form introduced to control holiday rental income

Hacienda, the Spanish tax authority, has recently published new legislation that will oblige all intermediaries in the rental of tourist accommodation, such us companies like Prestige Villas or holiday portals, to produce periodic statements identifying the owners of the properties being advertised and the amounts for which the rentals are offered to bring into the open all the undeclared tourist rentals by submitting the new Form 179.

Owners who rent their houses in Spain are required to declare rental income through Form 100 or Form 210 depending if the owner is a tax resident in Spain or not.

Form 179 will enter into force in July 2018, and those required to file this return will be required to provide information for the entire 2018 period, including the first two quarters of the year.

This new form must be filed on a quarterly basis during the month following the end of each quarter, as is the case with the quarterly IVA (VAT) declaration. I.e.: the first quarter will be presented in April and the second quarter in July.

In summary, every owner who has rented their property in Spain and do not declare the income, according to the new law from 2018, Hacienda, with the information received through Form 179, will know all the necessary details to claim the taxes for rental incomes to prepare and file the corresponding fine.

The information provided in this article is not intended to be legal advice but merely conveys general information related to tax and legal issues. If you are a property owner concerned about any of the information in this blog post, it is advisable that you speak with your Spanish tax advisor or accountant.

When to apply for a renting license and how much it will cost

For the past year, we’ve been writing about the current situation regarding renting licenses for holiday villas and apartments on our blog. Specifically, we’ve discussed the legal requirements, the zoning project. Today we are back with an update that helps shed some light on some of the points that need more clarification: when and how much will licenses cost.

Provisional date

The Mallorca Council has prepared a new zoning proposal after the feedback received from the different municipalities of the island, and now the Environmental Commission of the Balearics has a month to finalise their report. This report is expected to be approved in the parliament session on the 27th July, but then a period of 45 days will be open to receive feedback and meet up with several associations pushing the final application date to the end of September. In the case of the capital, Palma, it looks like it might take a few weeks more until the 1st August, as their zoning proposal was introduced at a later date.

Cost

The determined prices for each sector which include €875 per place of occupancy for apartments, €3.500 for townhouses and villas and €291,67 for those who choose to rent their home for up to 60 days. Find out more about the pricing here.

5 Tips for Selling your Home

There’s no doubt of the desirability of owning property in Mallorca, so selling one should be a piece of cake, right? Well, if you are serious about selling it and doing so quickly, then not really.

The island is awash with beautiful properties. Many potential buyers will have stayed in some during their holidays, some may have decided to buy based on their experience of their luxury holiday home in Mallorca. Your property needs to live up to that dream; the buyers’ expectations.

Think about the character of your property, nine times out of ten, that is what buyers want. So walking into a home that you have lived in for the past ten years which is full of things that make up your daily life is not going to conjure their vision of life in Mallorca. Perhaps your property has been rented for a while and wear and tear is showing through. A cluttered house in a sad state does not shout “Mallorca Living”.

Tip 1: Have a good old clear out

It’s time-consuming and a pain, sometimes emotionally draining even, but you have to do it anyway so why not get started and improve the overall image of your property? A wide open space shows potential while a crammed and busy space just feels small.

Tip 2: Blank canvas & presentation 

Once you have this job out of the way, let us get cracking with the photo shoot. This is the first opportunity to give that perfect first impression. While you may have got rid of clutter, for the photos, take away personal items. Think about your home becoming a blank canvas for someone to come in and make their own.

Open up all the doors, windows and shutters and shed some light on the subject. Make it light and airy, inviting and attractive. We will do our best to highlight the character of your home and be sure to capture each and every part.

Tip 3: Cleanliness

With the above steps carried out, it’ll soon be time for viewings. Potential buyers are intrigued by the photos, now make this a reality. This is another first impression opportunity and it has to look good from the beginning, ie from the garden gate or front door. It should smell good too. Get rid of any rubbish, recycling and perhaps skip the fish dinner the night before. Neutralise your home, have fresh bed linen on the beds, mop the floors, put your old shoes away, wash the pet bedding and move rubbish/recycling bins out of the way.

Tip 4: Get everything working seamlessly 

At the viewing, let your Estate Agent do the selling, try and stay away so that potential buyers will feel comfortable enough to have a good look around. And be sure that when they do, your buyers don’t find any annoying things like a broken step, a door that won’t shut. Fix all these small jobs, it will make a difference.

Tip 5: Price

Lastly, it’s important to note, no one will bother to look if the price is wrong. Listen to your Estate Agent and look at similar properties that have just been sold in the area. You may be selling a Mallorcan dream, but it has to be at the right price.

Take a look at our range of properties for sale in North Mallorca. 

New law for holiday rental apartments in Mallorca

In recent years, villas and townhouses have had it easy to obtain renting licenses whereas apartments, on the other hand, have not been allowed to apply for a renting license for the last two decades.

A way round this used to be the “Ley de Arrendamientos Urbanos”, sometimes referred to the tenancy act in English as this law does not set a minimum length of a let. Many owners and agencies were legitimately using this law for apartment rentals. As long as those properties were not advertised as being “holiday apartments” and no additional services were being provided i.e. cleaning, assistance phone, etc., and a lease contract was signed, they were within the law.

Recently, the Balearic Parliament has approved a new holiday rentals’ legislation. In addition to regulating the commercialisation of tourist accommodation, a real ceiling has been placed on the number of beds available in the islands. A balanced solution has been sought between the coexistence of residents and tourists and addressing housing needs.

According to the Government, this new ceiling of beds is meant to tackle the unlimited growth of tourist accommodation capacity of the Balearics. Whereas owners of holiday rentals such as villas or townhouses which are already licensed will be unaffected by the new bill, there is now a one-year moratorium on new permits for new holiday rental properties. The local councils and the town hall in Palma will use this period to determine which zones will be allowed to register new holiday rentals’ beds.

A new aspect of these new licenses is that you will need to buy places of occupancy from a limited stock.

There will also be a new restriction to limit the number of properties that one owner can market: no more than three. Additionally, any property that applies for a new license will have to be at least five years old.

The legislation creates new ways for prosecuting illegal supply by establishing a clear definition of the channels through which holiday accommodation is offered, and requires that a tourism license number is displayed on any advertisements. There’s even an email address so you can denounce your neighbours.

Furthermore, any property to be let for under thirty days will be deemed to be a holiday rental and therefore subject to all the relevant provisions in the legislation. This is the Government’s way of closing the tenancy act loophole on short-term rentals that are in fact for holiday purposes.

Any listing without license number will be deemed to be illegal, leaving websites and landlords liable to hefty fines – ranging from 20,000 to 40,000 euros for owners and up to 400,000 euros for agencies and portals. The Ministry of Tourism has set up an email for residents to denounce other owners who rent their apartments.

The legislation makes provision for the holiday rental of a “habitual dwelling” for a maximum of sixty days a year. This applies to both apartments and houses. These dwellings would still be subject to the zoning.

Our team at Prestige Villas will keep a close eye on upcoming news regarding the holiday rental legislation. Keep up to date by subscribing to our newsletter: click here. If you have any questions about the new law, feel free to contact us, we are here to help.

La Coma – family villa for rent in Pollença, North Mallorca

If you’ve been on our rentals website, I’m sure La Coma would have been one of the listings that stood out. Just a short distance into Pollença old town, the villa is so well located that if you fancy you could easily walk into town for dinner in the evening, or even hire bikes and ride into town whenever you like. Split across two floors; the villa can conveniently accommodate two families travelling together or a large family. 

As you walk in, you’ll find a large covered terrace with views right across the Colonya Valley. Whenever we’ve met with our guests staying here, they always comment on how wonderful it is to see the sky lit up with a blanket of stars and just how many you’re able to observe from this property.

If it’s entertainment for the children you’re thinking about when holidaying in Mallorca, then be rest assured that the children will be plenty entertained here. If it’s outdoor activities they like then there’s ping pong, a large field to play football in or of course the swimming pool. During the hotter hours of the day and for a bit of downtime then there’s always the chance to catch up on the latest things on the Apple TV or DVD collection.

Get to know it, see our virtual tour here:

Virtual Tour La Coma
Have a digital walk through and get to know the place. Click here to go on a virtual tour.

 

The villa is rented in the peak season months from June – September. If you are looking for a property to sleep ten guests, then we highly recommend giving this one a look.

It’s not just us that raves about it, check out a review from some guests last year:

“Thank you, Prestige Villas, for our relaxing week at La Coma. We knew from the moment we arrived the holiday would be everything you promised. We were greeted with a thoughtful welcome pack and great information booklet that explained all the necessary things about the house, plus useful information about the local area with restaurant recommendations as well as other places to visit in Mallorca. The villa was clean and comfortable. It had obviously been recently decorated and we really liked the relaxed, personal style of the villa. There was all the necessary equipment in the kitchen and it was of the best quality you could have expected from this type of rental property. The exterior of the villa was lovely. There is a lot of outdoor space, with an excellent pool and plenty of shaded areas on the terraces. The villa is in a quiet area and the views are great, excellent for star gazing at night! We had BBQ´s for dinner on most of the nights and decided to use the brick BBQ. Although it was tucked away from the views of the mountains, it was very good. There was also a smaller portable BBQ that could have been moved into a position to enjoy the views. An unexpected bonus for us was to find there was lots of toys for children a kitchen, tent, table and chairs, jigsaws, DVD´s etc. which our three year old loved! The villa was easy to find and very close to Pollenca. Although it would be possible to walk to town, I would not recommend it as the roads are quite narrow. It also only took us about 5 minutes to drive to two decent size supermarkets and 10 minutes to drive to the beach. We loved our holiday here and could not have asked for anything more. I would certainly recommend this villa to families and larger groups. There is lots of space, plenty of parking, and the separate annex by the pool is very private.”

Duplex Maria – apartment for sale in Puerto Pollensa

Duplex apartment located in the residential area of Boquer, just 150 metres from the Pinewalk and the beach of Puerto Pollensa. It is a very quiet and comfortable community either for living during all year round or to spend the holidays, with a fabulous community pool.

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The property is facing east; it is very bright and sunny during the middle hours of the day. It is built on two levels: ground floor and first floor and is distributed as follows: on the ground floor, there is the kitchen, a toilet, laundry room and living room/dining area, with access to the terrace and private little garden.

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On the top floor, there are the bedrooms and two bathrooms (one is en-suite).

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Equipped with aluminium exterior finishings, ceramic tiles, pine woodwork and wardrobes, hot/cold air conditioning.

Build area: 95sqm

Bedrooms: 2 double, 1 single

Bathrooms: 2 full, 1 guest WC

Community swimming pool, AC, built-in wardrobes

Price: 278.000 €

 

See more on our website and enquire.

Tax Guide for Non-Resident Property Owners in Spain 2016

Management of Non-resident Taxes

 

Income Tax

As non resident in Spain and owner of a property you are liable to the non residents income tax. This tax is paid once a year. You pay it before the end of the current year for the previous one (in 2016 you will pay for financial year 2015). The amount due is calculated on the cadastral value of your property. This amount is the result of applying a 19.5% on the 1.1% of the assessed value.

Cadastral Value x 19.5% x 1.1%

Please note that if you rent your property you also have to declare this income but instead of declaring this income once a year you will have to declare it quarterly. The amount to declare is the entire amount received from the tenant, without deducting any costs*.

*Nevertheless, as we are dealing with taxpayers resident in another European Union member state, the expenses described in the Law on Personal Income Tax (IRPF) can be deducted when calculating the taxable base, as long as proof is provided that these expenses are directly related to income earned in Spain and have a direct economic connection that is inseparable from the activity carried out in Spain.

  • Income accrued in 2014: 24.75%
  • Income accrued in 2015: 19.5%

 

Wealth Tax

Wealth Tax has been re-established temporarily for tax years 2011, 2012, 2013, 2014 and 2015, accruing on 31 December of each of these years. Wealth tax is an annual tax, payable on the total value of your taxable assets as at 31st December. If you are resident in Spain you are liable to the tax on your worldwide assets; if non-resident, then only on your Spanish assets.

Tax base: The current tax-free allowance for non-residents is 700,000 €

Obligation to declare: All taxpayers with a positive tax liability are obliged to file a tax return.

 

Local Taxes for Property Owners

Local yearly Property Tax: The Impuesto sobre Bienes Inmuebles (known as IBI) is fixed by the local authorities ayuntamiento), depending on both the value of the land and of the property itself. This tax is paid yearly (before the end of November), and you can go to the local tax office and pay it directly when you receive the yearly notice in your postbox, or you can arrange an automatically debit from a Spanish bank account (the best option if you do not live permanently in Spain).

Local yearly rates: House-owners in Spain are also required to pay yearly rates, which is a contribution to street lighting, maintenance of facilities and rubbish collection. The yearly amount again depends on the area and is paid to the local council.

 

This text was written by the offices of Alfonso Benavides Y Asoc. S.L.

 

Find out More:

If you would like further information regarding this information, contact Alfonso Benavides Y Asoc. S.L. by email.

Sales Highlight of the Month – Vista Can Botana, Ref: 7918

Vista Can Botana

A fantastic two bedroom penthouse in a very tranquil location in Cala San Vicente, only 400 meters from the beach of Cala Molins. It is located on the second floor of a complex of 8 properties with a shared swimming pool.

The property has a built surface area of 82.5 m2, and has a private roof terrace with the same size of the flat, from which you have fantastic views of the neighbouring forest of Can Botana, with ancient mediterranean oak trees.

Vista Can Botana

The apartment opens out onto two double bedrooms, two bathrooms (one of them en-suite) and a lounge diner with open plan kitchen. Both bedrooms and lounge lead to a terrace.

Vista Can Botana

Vista Can Botana

Vista Can Botana

A nice back stair takes you to the roof terrace. There is a communal swimming pool with a small solarium area. There is a private uncovered parking space as well. The property is to be sold fully furnished, as seen.

Vista Can Botana

 

Price : 239,000 €

Built area 82.5 m²
Bedrooms 2 Double
Bathrooms 1 Full 1 Shower
Central heating, built-in wardrobes, shared swimming pool

 

To view this property or to get more information, enquire through our website: Vista Can Botana

Tax implications for Landlords in Mallorca, Spain

In a recent collaborations with Alfonso Benavides & Associates, we spoke to them about tax implications on property owners in Spain and what owners are required to do.

Below is an extract of their introductory information for anyone unsure of what is required of them:

All employers, professionals, and landlords or lessors of property for housing and commercial purposes, as taxable persons for the purposes of IVA (Spanish VAT), are obliged by law to keep invoice records.

Generally speaking, both employers and professionals, as taxable persons for the purposes of IVA, are obliged to keep the following records:

  • Record of invoices issued
  • Record of invoices received
  • Record of investment assets
  • Record of certain intra-Community operations

Manual, computerized or electronic accounting systems are all considered valid for making entries and annotations to the records of invoices issued and received and investment assets.

Record of invoices issued

Invoices or substitute documents issued in relation to all IVA transactions, as well as amendment invoices or substitute documents should be registered in the record of invoices issued.

Record of invoices received

Invoices relating to goods purchased or imported and services received in the conduct of the business or professional activity should be recorded in the record of invoices received.

Record of investment assets

This record must be kept by those taxable persons who qualify for investment deductions. The following details should be recorded:

  • All investment assets, itemized individually
  • Precise details to identify the invoices and customs documents relating to each asset
  • The date of commencement of use, the definitive pro-rata rate (DPR) and the annual adjustment for the deductions, where applicable, for each itemized asset.

Find out more:

If you would like further information regarding this information, contact Alfonso Benavides Y Asoc. S.L. by email.

La Telaraña – Beautiful Family Home for Sale

La Telaraña is a beautiful family home, located just 1.5 kilometers from Puerto Pollensa, in a small cul-de-sac. You can take a long stroll into town or it’s just a quick drive in the car. The property has been recently reformed with the best quality materials and the result is stunning. It is decorated with a lot of style and warm colours with furniture pieces imported from a high quality furniture company from the UK.

The large heated, saltwater pool, it great for spending time enjoying outdoor living in Mallorca and the large covered terrace, reformed in 2015 with built in BBQ area is perfect for entertaining.

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Bright and spacious kitchen with island in the middle. Fully equipped with Bosch induction hob, microwave, oven and modern fridge/freezer.

The property has great rental potential and is rented well throughout the season. As the property has central heating, it can be rented year round.

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Indoor seating area.

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Just off from the seating area is a playroom set up. Very popular with guests renting this property as it is a very family friendly feature combined with the heated pool.

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Two downstairs bedrooms, the white one has en-suite shower room and the black one has a shower room next door.

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Upstairs bedrooms. Both with en-suite. The master (right) has en-suite with separate bath and shower.

Ground Floor Plan

First Floor Plan

Plot size: 2416 m²
Built area: 306 m²

Bedrooms 4 Double
Bathrooms 2 Full 2 Shower

Price : 1,400,000 €

See La Telaraña on our website: click here >