tax situation "buy to let" property in Fuerteventura

[Buckshee]

apologies if this has been covered elsewhere peoples but perhaps you could direct me in the right direction.

I have two private residential properties in the Dublin area and both are up to date with tax returns etc etc. After all allowable expenses they are just about breaking even or making a small profit for tax purposes which is eating into a small accumulated loss which has accrued over 5 years or so.

I understand the logic of the argument of buying a new property, which because of increased prices / interest rates etc will undoubtedly make a loss as the rent will not cover the mortgage/expenses. Reasoning for this approach is to minimise the tax liability from the first two houses or in a nutshell the profitmaking 1st two will hopefully subsidise the loss making third.

My question is this....... If I buy the 3rd place in spain ( Fuerteventura in the Canaries to be exact ) will it be treated by the Irish Revenue people the same for tax purposes as if it were an Irish property i.e. can I claim "allowable expenses". PS - I understand a little about the Double Taxation situation ( pay spanish tax first to Spanish authorities then make return here and pay any difference ).

Essentially what i need to know is will my return be allowed to included these all important "allowable expenses". Also is an Irish mortgage or a spanish one recommended in this type of transaction.

I accept I can't get definitive answers here but any bit of guidance would be appreciated.

Thanks

Davy

 

[ubiquitous]

If I buy the 3rd place in spain ( Fuerteventura in the Canaries to be exact ) will it be treated by the Irish Revenue people the same for tax purposes as if it were an Irish property

No - The Irish tax code categorises foreign income differently to Irish rental income. It is not possible to offset losses under one heading against profits under another.

 

[markowitzman]

Try and get a spanish mortgage for wealth tax and inheritance tax reasons in spain. Also make sure you have spanish will.
Blevins franks have advised me on this and other matters pertaining to spanish buy to let and I would recommend them.
Alternatively the book they publish "living in spain" is excellent and a lot cheaper (about a grand cheaper!). [broken link removed]

 

[Buckshee]

No - The Irish tax code categorises foreign income differently to Irish rental income. It is not possible to offset losses under one heading against profits under another.

So for arguments sake, if the foreign property makes a loss does that mean that I won't have either a Spanish or an Irish tax liability but I can only accrue the losses with the Spanish tax authorities until such time as the property becomes profitable ??? Then as soon as it does become profitable I'll be liable for Irish tax also....am I on the right track ?

 

[ubiquitous]

So for arguments sake, if the foreign property makes a loss does that mean that I won't have either a Spanish or an Irish tax liability but I can only accrue the losses with the Spanish tax authorities until such time as the property becomes profitable ??? Then as soon as it does become profitable I'll be liable for Irish tax also....am I on the right track ?

Don't forget that Spanish and Irish rules may differ. A single income stream may yield a loss in one jurisdiction and a profit in the other.

You may also be able to accrue losses for Irish tax purposes until such time as the property becomes profitable - you will need to check if this is possible.

 

[Buckshee]

Thanks peoples...... Thought it might suit to do it this way but probably best to stick with the devil I know.