The 7/2019 Royal Decree amends, among others, the Law on Urban Rentals.
The most significant changes are the following:
- The minimum term of a contract has been extended from three to five years for individuals and seven for companies; consequently, if the agreed term is less than the aforementioned periods, the tenant will be entitled to extend it for annual terms until it reaches the five or seven year term.
For the past years one of the main aspects which have driven our economy’s growth has been investments in real estate assets across Spain and to a large extent, such came from foreign investors. Many were intended on a buy-to-let basis.
Clearly one of the main aspects prior to taking the decision is how will my income be taxed, especially that coming from rentals, since depending on how the investment is made it will be taxed at a rate or another.
The Supreme Court in a recent ruling dated 23 May 2018, has determined that property valuations for Transfer Tax purposes can not be calculated by simply applying a multiplier to its Cadastral value, shifting the burden of proof to the taxpayer who would have to prove (if the property presents singularity) that the value differs from the one quoted by the authorities.