Tax on property in Gibraltar

Every non-resident landlord should know what tax is payable in Gibraltar on their Gibraltar property rental income. However, this is not always easy to calculate.

What is sometimes quite difficult to find out however, is, what tax is payable in Gibraltar on a landlord’s Gibraltar property rental income.

In this article, we, set out the rules on the tax payable on the rental of Gibraltar property by a non-resident (of Gibraltar) individual.  

Real estate income

Tax is charged on income of all individuals in respect of any rents, premiums and any other interest in real estate property located in Gibraltar.

Income Tax Office registration

The individual must register at the Income Tax Office using the Rental Income Registration Form. Once approved the Income Tax Office will send by post the approval letter and all documents they will need. By the end of every tax year (30 June), the landlord must submit a completed tax return together with an income and expenditure account by 30 November each year.

Payment of tax

Initially the landlord should complete and submit the rental income application form. First payment on account must be paid by 31st January based on 50% of the previous year’s tax liability. Please see Self Employment at a Glance document which sets out the further rules.

Tax rate

For non-resident individuals, the first £16,000 of taxable income is charged at 17% with the remaining balance at 39%. The individual can however opt to be taxed as an ordinary resident so long as they declare their worldwide income. This is particularly helpful for non-resident landlords with no other Gibraltar taxable income. On their annual tax return the non-resident landlord would need to advise the tax office of their intention to opt to declare their worldwide income and enclose proof of said income showing the income earned abroad and tax deducted.

Which expenses may be deducted?

Deductions for expenses are only allowed if they are wholly and exclusively expended for the purpose of the property rental and are revenue rather than capital expenses. Capital expenditure generally relates to buying, improving or selling the property and is not normally allowable, although expenditure incurred on painting, decorating, repairing or enhancing the appearance of property can be an allowable expense, if certified by the Town Planner.

Common types of revenue expenses paid by the owner that can generally be deducted are:

1. Rates and service charges

2. General maintenance and repairs to the property

3. Interest on a mortgage to buy the property

4. Letting agent and management fees

Can a landlord claim capital allowances? 

Equipment, fittings and furniture used inside a residential property do qualify for capital allowances in Gibraltar. This can provide a significant deduction against income. The assets which may be eligible for capital allowances include all the furniture used in the property as well as rugs and white goods. Generally, this means that 100% of the cost of such purchases can be deducted in the year of purchase, up to £30,000 per year, and for any excess a 20% annual writing down allowance.

Can Chestertons assist with Gibraltar landlord tax compliance?

Yes, our property management systems are fully endorsed by the Institute of Chartered Accountants in England & Wales. Our landlord statements provide a full summary of income and expenditure between any two dates. We maintain these records for you at no extra cost where you choose to rent your property with us.

Meanwhile, our group company, Buckingham Corporate Services, will be able to manage all the necessary tax compliance paperwork for you. Call them on +350 200 62272 or info@bcs.gi

Can I ask my own questions to the Gibraltar Income Tax Office?

Yes, contact the tax office on 200 74924