I am a UK resident with an apartment in Spain and am a little confused as to my tax liability on rental income.

Im assuming that if my rental income exceeds my total expenses, then there will be a tax liability.  On the other hand, if its a loss position, Im assuming no tax liability.

However, I am uncertain as to what expenses I can offset against the rental income. I have a Spanish mortgage on the property and (like many others) if I off-set the  interest element against the rental income and then deduct other expenses (community of owners payments, cleaning ect) Im in a loss position.  

the question is can you offset the interest element of the mortgage?

If not and tax is due, should this be paid to the Spanish or UK tax authorities?

If it's due to the Spanish authorities, does it still need to be declared as paid to the UK authorities?

If anyone knows the answer to these questions, perhaps you could advise.

Many thanks  

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I am not 100% positive of this myself, but if you are a non resident, you are unable to claim any allowances against your Spanish tax liability. The Brits and Spaniards have a dual tax treaty though, this means that you can claim some allowances back from the UK taxman. During the times in the year the apartment is for rental, you can claim back tax for mortgage interest, wear and tear (10%pa if you purchase them outright), tax on furnishings (but you cannot then claim the 10%pa), utilities, insurance, etc, etc. I downloaded a form from the Inland Revenue site (Form SA106-tax allowances) which gives you most of the information you need to know.

Mark

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