Just two weeks post-Brexit transition, it is already gloomy for Brits having properties in Spain as Santiago Lapausa, an economist, anticipate a tax increment of 5% on their rent profits if a definite arrangement is not attained.
Starting from January 31st 2020, the United Kingdom (UK) ceased existing as member of the European Union (EU). From this date until December 31st 2020, known as transition, both parties still have to agree on the terms that will bind their future relations
Prior to January 31st, as EU’s citizens, Britons with properties were allowed to deduce their expenses and then charged to pay a tax of 19% from profits made from renting out their possessions.
Lapausa at the Brexit warns that, if the transition period elapses and they are considered third country citizens, woe on British real estate owners, as all of these benefits will ceased, taxes will increase to 24% and deducting expenses will not be tolerated.
Even so, the Brits might not be the only parties to suffer this provided that the greatest percentage of buyers at Costa del Sol real estate market and Costa Blanca market are British. They often buy properties and pay off the loan from the money they get from renting them despite being away. To add, a number of industries rely on managing these properties and might become derelict as a result.
Nonetheless, this remains the transition period, as the UK and EU negotiate on the terms of their future relationship, the existing rules on trade, travel, business will remain the same until December 31st 2020.