Buying Tenerife property to rent out

Dave_Anthony

Hello everyone,

Due to the miserly interest rates being paid out at the moment I am considering using my savings to buy an apartment in Tenerife to let out whilst I count the days down to my retirement.

Although sorely tempted not to notify the blood-suckers at the HMRC of any such purchase I understand they are using foreign land registries to trace owners!

Before starting any detailed research I wonder if anyone could advise me:

• What rate of UK tax am I likely to pay on any income from letting my property out?
• What rate of Spanish tax am I likely to pay on any income from letting my property out?

Thanks

theartfullodger

What is the highest rate of UK tax you pay currently & what do you expect to pay in retirement, assuming current rates continue (they won't btw...)...

Will you object to the blood-suckers at HMRC if they collect tax to pay benefits you have/will receive?? CB, Pension, JSA - you know..??? In retirement & in receipt of a state pension will you regard yourself as a vampire?? No money in, no money out eh??

Cheers!

Annisele

I think you're "wagging the tax tail before the investment dog".

Putting tax aside, would this be a substantial part of your portfolio? If it would be more than, say, 5% of your total assets it's IMO a pretty high risk strategy.

How would you find tenants? Who would you pay to do the cleaning etc?

Dave_Anthony

I’m currently paying standard rate tax of 20% which will probably continue when/if I do make it to retirement.

By the way, I don’t object to taxation in principal (despite the fact that Income Tax was originally only intended to be a temporary measure), just the amount tax-payers have to pay and the colossal sums that are just wasted.

What also irks me is that not only am I taxed on my earnings but if I’m able to save some cash after this then the interest on those savings is also taxed! Then, if I invest any of my twice-taxed money to generate a small income to make ends meet, the state takes another slice!

Dave_Anthony

Annisele wrote: »

I think you're "wagging the tax tail before the investment dog".

Putting tax aside, would this be a substantial part of your portfolio? If it would be more than, say, 5% of your total assets it's IMO a pretty high risk strategy.

How would you find tenants? Who would you pay to do the cleaning etc?

This would be putting all my savings into this one investment so, yes, it would carry an element of risk.

For the last few years I've rented privately-owned apartments in Los Cristianos, Tenerife. These are good-quality apartments in a managed complex, which seem to be in great demand. Many of them are already fully-booked for the year! If I could acquire such a type of property it may still yield more than just putting my capital in bank accounts or shares….dependent of taxes, of course.

Thrugelmir

Tax depends on how many days you are resident in Spain.

You may find the Spanish are equally as bloodsucking if not worse depending on your circumstances.

AlexMac

Eurostat today revealed that while UK house prices rose by almost 2% p.a. last year, house prices in Spain dropped by 15.9%!

So it depends if you're a "glass half empty - they will continue to plummet.... don't touch it with a barge-pole"
or a
" glass half full- Spain must be at the bottom - the Eurozone crisis is over and so now's the time to buy; I might make a bit of money from rentals, my propert might appreciate, and I can holiday in the Canaries" type guy?

So I suspect it's an emotional, rather than a rational decision; if you fancy a place in the sun, go for it.

But if you are only doing it for the money, compare the % return on your investment (after agents fees and charges for maintenance, bookings, cleaning, rpairs, services, etc) with waht you'd get on a little local BTL. We dumped our holiday cottage last year and bought an ex-council falt for £150k. Even after costs and tax, the £875 a month rental buys a lot of holidays.

But then we did love having a tiny flat in Italy for 5 years and learned to speak Italian- a bit- although admittedly it only cost £25K

missile

AlexMac wrote: »

..... we did love having a tiny flat in Italy for 5 years and learned to speak Italian- a bit- although admittedly it only cost £25K

Must have been really tiny :eek:

jamie11

The fees of having a place managed will be very high, the priority of the managers is to get their own places let first, your single property will be very low on their list.

If you think of letting it as a home to someone, beware, the laws are not the same as in UK. If you don't know what you are doing you could end up with a tenant that has an almost permanent tenure.

C_Mababejive

I may be wrong but i dont think that you are legally obliged to register land/home ownership in spain under their land reg.