Tenerife holiday home

T

tcomber

Guest
Thinking of buying a house in Tenerife costing €240,000 borrowing €180,000. After getting some advice I am lead to believe that in addition to paying mortgage and community charges of €600 per year you are also libel for 25% tax if your house is not rented out. I dont intend to rent out the house can anybody give me advice and example of how much tax would have to be paid. Can i offset the interest paid on the mortgage against this tax.
 
You are liable to tax of 25pc of the income of a property that is rented.
This does not apply in your case as you do not intend to rent it out.
There are other taxes that you pay but really they are quite reasonable.
For instance this year I paid about €75 or rubbish collection and a daily collection at that. You will also pay local rates and the amount depends on the Ayuntamiento (Council) where your property is located.
You also pay an annual Net Worth Tax, (wealth tax) depending on the value of the property. This tax is between 0.25 and 2.5pc of the value ot the property. If you have a Spanish Mortgage that is registered with the property registry, you can claim the payments against the NWT.

There is a website www.foreigntaxreturns.ie with loads of information on this subject. Click on Spain. then Spanish property taxes.
For a fee they also will calculate your tax and submit your declatation.
If you are new to the Spanish Tax system I would recommend that you follow this course.
I have property on another of the Canary Islands and I employ a local accountant to do this. It costs about €200 yearly but is well worth it.
Hope this is of some help.