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Thread: Ways on How to Avoid Inheritance Tax on Spanish Property

  1. #41
    Senior Member
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    Dear Mr Packham,

    For IHT purposes, the taxman takes the highest of the following three:

    1. Declared value of acquisition (on title deed)
    2. Compared value on other taxes
    3. Cadastral value

    I'm aware the taxman of late is now looking with a magnifying glass at these values to apply the highest. Before this crisis, they use to have a more lenient attitude albeit now securing taxes has become a top priority for them.

    Regarding strategies to minimise the IHT impact the most succesful ones are normally done prior to purchasing the property, not after. I would advise taking a whole life insurance cover having as cross beneficiary your wife. Ideally these should really be hired before you reach 50 so as to to reap the maximum benefits.

    As per our replies above, we do not make tax assessments on a free basis, sorry, much less IHT.

    Should your spouse die, you would hardly have to pay any IHT tax at all so long as you comply with what I quote below:



    Inheritance Tax in AndalucÃ*a in which beneficiaries, resulting from a death occurred after the 7th of June 2008, may benefit from the following regional tax allowances:

    •Reduction of 99.99% in the IHT taxable base on inheriting the family home (main residence) for deaths occurred after the 1st January 2003. This requires the beneficiaries being resident in AndalucÃ*a, such as yourselves. I trust you file taxes here annually to benefit of this regional tax allowance.

    •Reduction of 99% in the IHT taxable base on those inheriting a business providing certain conditions are met.

    •No IHT paid on the Estate itself on compliance with certain requirements (i.e. inheritance taxable base < €175,000, heirs are next of kin or spouse, heirs pre-existing wealth < €402,678.11).

    •No IHT paid by physically handicapped (disability above 33%) with a taxable base < €250,000
    The problem would be your only son, who is non-resident in Spain as he's domiciled in the UK for tax purposes. His IHT liability may be high on inheriting the full property. Any tax mitigation strategy should have him foremost in mind rather than yourselves (you and your spouse).

    Notwithstanding the above, there's a silver lining regarding your only son (beneficiary):

    EU Pulls the Stops and Vows to Put and End to Inheritance Taxation Discrimination on Non-Resident Beneficiaries Inheriting in Spain - 20th May 2010

    Yours faithfully,
    Raymundo LarraÃ*n Nesbitt
    Last edited by Lawbird Lawyer; 06-14-2010 at 09:54 AM.

  2. #42
    vicky
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    Default Ways on How to Avoid Inheritance Tax on Spanish Property

    hi
    i am buying a property in spain and the guy passed away and has left an english will leaving it to his nephew who now has the probate sorted with cert etc...can i now deal with this through him...if there is a spanish will made years ago will this current english will over ride the spanish one as this was his last will so long as its translated etc..my fear is that there could be a spanish will leaving it to someone else!

  3. #43
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    Dear Vicky

    A last will will overrides any prior one on what is found contradictory, yes.

    In any case the property cannot be sold on until the rightful heir signs the Spanish Acceptance Inheritance deed and files/pays the associated IHT.

    Only once the property is lodged under the vendor's name can you legally buy it from him.

    Yours sincerely
    Raymundo LarraÃ*n Nesbitt

  4. #44
    vicky
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    Default Ways on How to Avoid Inheritance Tax on Spanish Property

    thanks very much...thats great

  5. #45
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    You are welcome.

  6. #46
    Pauline
    Guest

    Default Ways on How to Avoid Inheritance Tax on Spanish Property

    My father died without leaving a will and he owned an appartment on the costa del sol with his ex partner. Their are 2 children to inherit but working out the capital after the mortgage and taxes of the half share it does not seem worth claiming. Can anyone tells me what happens to the half share if we dont claim the property.
    Thanks

  7. #47
    Senior Member
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    Dear Madam

    The legally next in line would inherit then.

    Depending on the amount of debts, creditors.

    You can always follow what's known as "aceptación a beneficio de inventario". The assets less the liabilities are calculated exactly to see how much you stand to inherit -or not-. If the estate is in negative equity you simply do not accept the inheritance as it's pointless and even dangerous (read below).

    What's very, very important to note is that in Spain on accepting an inheritance, should there be outstanding liabilities or debts, and the deceased's estate proves inssuficient to cover them you will be held personally liable to pay them off (meaning you inherit all the deceased's debts) with your own assets unless you have previously accepted it as I decribe above (aceptación a beneneficio de inventario).

    Sincerely
    Raymundo LarraÃ*n Nesbitt

  8. #48
    tony
    Guest

    Default Ways on How to Avoid Inheritance Tax on Spanish Property

    my father has a property in tenerife, he is no longer able to travel there and has decided to transfer the property to myself and my brother, both resident in the uk.
    Is this a wise thing to do?

  9. #49
    Yvonne Murcia
    Guest

    Default Ways on How to Avoid Inheritance Tax on Spanish Property

    My husband and I own a villa in Puerto Lumbreras Murcia and took up residency at the time of purchase in 2007. It is worth about 300,000 - 325,000. We have a mortgage of about 60,000 on it. We have made Spanish wills leaving it to one another and then our three children (two resident in UK and one in the UAE). I am not sure how much inheritance tax we would get charged should one of us die. We nearly went down the Wincham path and after reading comments on this site am so glad we didn't. Would it be wise for us to write UK wills to override the Spanish ones or would it be more beneficial to stay with the Spanish ones and include our UK apartment etc?

  10. #50
    Raymond thomas
    Guest

    Default Ways on How to Avoid Inheritance Tax on Spanish Property

    We own a property in Murcia(150,000euro) in joint names with my wifes sister and husband. My brother in law has just died and now everyone says we would have been better to have had it has a uk company. What would be the best way forward to save problems in the future.

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