Mallorca Rental and Investment Property – Beware of the Taxman!

With Governments throughout Europe and the Western World desperate to decrease their deficits it comes as no surprise that the latest target  for HM Revenue and Customs are owners of second home abroad and particularly undeclared rental income.

The inspectors have been told to claw back a sum of £560million in lost revenue by 2015 and a team of 200 Inspectors has been established. It appears that they will be scrutinising advertisements placed by second home owners in magazines and on the internet to get information on owners. Furthermore they will be checking overseas land registers to identify taxpayers with properties overseas.

Although the the move is part of a campaign against evasion by the 330,000 richest individuals (ie those in the 50 per cent tax bracket earning over £150,000 a year) the net will undoubtedly catch other “middle income” owners that rent out their holiday properties and do not currently declare this as income. The reason that one of the Revenue’s first targets will be second home owners is because holiday homes are seen as an easy and common way to hide non employment income from the taxman.

Advice? Difficult as I don’t want to suggest things which could be regarded as advice as how to cheat the taxman, but if you do rent make sure you declare at least something and be careful with the information that you provide on any web site! Interesting will be to see whether they will try to obtain information via Rental Agencies and, in this regards, whether they will collaborate with local Tax Authorities such as Hacienda in Spain.

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