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
