Apportioning expences for tax - non resident

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joddle
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Apportioning expences for tax - non resident

Post by joddle »

Hi - My sister is new to Spanish property ownership and has inherited a villa from our parents and is now facing doing her tax return for Q2 2017.

Whilst all the inheritance things are now legally done and dusted we are having a problem with the way income and expenses are worked out.

The issue is that rents are sometimes received in advance so for example she has rentals deposited in Q2 but for rentals which will occur in Q3. So far simple enough - declare the income on the Q2 form

However the biggest expenses will come in Q3 with use of utilities, cleaning and agency fees contribution etc etc but the income then will be much reduced so we won't get the benefit of the relief.

The question is, are (or can) these expenses be recalculated on an annual basis once all bills and income are known?
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CSE
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Post by CSE »

For the sake of around 50€ save all of this hassle and go to a good gestoria. They can give you the information you are looking for. It does depend on how the business is run. Actually did our tax return today took less than 30 mins for both of us. All the forms filled, sent online and also found out what is due.
Money well spent. :)
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joddle
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Post by joddle »

casasantoestevo wrote:For the sake of around 50€ save all of this hassle and go to a good gestoria. They can give you the information you are looking for. It does depend on how the business is run. Actually did our tax return today took less than 30 mins for both of us. All the forms filled, sent online and also found out what is due.
Money well spent. :)
Totally agree - and I am using a great gestor but I simply wanted to know a few details on how the expenses are accounted for in a particular quarter when all the payments may not have yet been made or will get paid later in the year or possibly in the following year. Its only to help my understanding of how it works! Not thought of doing it on line though - may be worth a look!
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Casscat
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Post by Casscat »

I think income is reported on an 'as and when received' basis. You have the cash so that's when tax is payable. I used to submit my quarterly non-res schedules to my accountant on that basis.
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joddle
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Post by joddle »

Casscat wrote:I think income is reported on an 'as and when received' basis. You have the cash so that's when tax is payable. I used to submit my quarterly non-res schedules to my accountant on that basis.
Yes that is correct - but for us most of our bookings and expenses are for Q3 although we get some advanced payments in Q2. So we declare the income for Q2 and Q3 but in Q2 especially, most of the bills have not arrived so we can't claim much relief in that quarter and in the following quarter there is not so much income to claim against. This I wondered if there was an end of year reconciliation which takes account of everything together.
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Casscat
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Post by Casscat »

As far as I am aware the answer to that is no. Just one of the ways non resident owners are penalised in Spain :D
Zingara
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Post by Zingara »

If she has a dedicated (Spanish) account for the rentals / expenses, perhaps she could use an intermediary account (eg. a UK one into which she receives the rental income) and transfer it to the Spanish one as the rentals occur? I guess the gestoria would have to approve....I'm sure it's been tried before and -dis-approved'
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joddle
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Post by joddle »

I have just been informed by a Spanish accountant of the following which actually answers my question.

"I believe that if it is clear that the expenses correspond to a period in which the house has been rented, and this moreover also is clearly documented in the official invoice, this expense will be deductible in the period in which the house has been rented".​
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Casscat
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Post by Casscat »

My rental income was taxed on a remitted basis. That kind of makes sense because income is income, and that is generally based on when you receive it in your hot little hand. If I was a freelancer and got paid for a job before I actually did it (unlikely I agree), I'd be taxed on the money I'd received when I received it and not when I performed the contracted task.

The great thing about Spanish gestors is that they never agree on anything :D
gardenboy
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Post by gardenboy »

I just did mine via gestor. Make sure you claim all your allowances if you can get proper receipts. Gestor charged me 150e money well spent imo
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