Holiday home in Spain post Brexit?
What will it mean for you?
There are nearly 200,000 British who own homes in Spain.
For those with holiday homes in Spain, What now?
The consequences for those non residents owning a holiday home will certainly mean greater uncertainty and some or all the rights previously enjoyed will be affected.
European Health Insurance (EHIC)
If Brexit servers ties with the EEA as well then EHIC will likely cease to exist.
No longer will you be entitled to any State provided medical treatment or heathcare in the EU or Switzerland. Overseas travel and health cover is going to be a must.
Rent out the holiday home?
If yes, then income tax will go up! The non resident tax rate will increase from 19.5% to 24% as a result of leaving the EU. Post 1994 the taxable base is 1.1% of the Cadastral value and then multiplied by the tax rate. Make sure you get a lawyer to file the yearly tax on your behalf.
Biggest change is no longer will you get Spanish tax deduction for property expenses against your rental income!As a member of the EU you can claim a deduction for mortgage costs, insurance and maintenance etc. This will no longer apply
Don’t Rent out the holiday home?
If no, you will still get taxed! The authorities treat you as deriving a benefit even if you don’t. It is a fixed annual fee. The tax rate will go up from 20% to now 24% as a non EU resident.
Selling your property?
If you are lucky enough to make a gain on the sale of the property, the capital gains tax (CGT) for non EU residents is generally 24% opposed to 19% for EU residents. So a 5% increase in the tax rate. 3% is still withheld direct by the purchaser which can be refunded if CGT is less.
Then there is gift and succession tax to think about. This will be higher as well for Non EU residents. So, overall it will cost you more in the future. As for property prices who will know what the future holds. For buyers, certainly, with the fall in Sterling there will be lower numbers buying a holiday home. For sellers, it may take longer to sell and demand could fall if other EU buyers do not take up the slack.
2016 UK budget
