THE
SPANISH ECONOMY AND THE PRIVATE RENTED SECTOR - 03/02/10
Possibly
more than half of spanish landlords are avoiding their tax liability
as the rental market expands, depriving the financially strapped government
of revenue.
The crisis
in Spain triggered by the housing crash has left the government with
a large budget deficit and as the hidden economy grows the government
will be compelled to clamp down.
A drop
in house prices starting in the second quarter of 2008 has forced
many people who bought homes as investments to seek tenants for their
properties rather than selling at a loss. Also, there are more and
more prospective tenants that require these properties and who are
willing to deal in cash.
The penalty
for avoiding tax on rent is a fine equivalent to 150 percent of the
unpaid amount and the tax must also be repaid. There is no punishment
for the tenant.
There
are currently significant tax breaks for landlords renting to tenants
under 35 years old and this has helped to confuse the situation.
Rental
values have been shown to fall during 2009 but this is on the back
of significant increases in previous years.
INFORMATION SOURCE - BLOOMBERG.COM
