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

  1. #11
    Eddie
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    Default Ways on How to Avoid Inheritance Tax on Spanish Property

    Hi,
    My wife and I own a property in the Balearics worth approx 350,000Euros. I am 64 and my wife is 57. We have had this property for 22 years. We have a Spanish will and our two sons are the beneficiaries. Can I gift the property to our two sons now to avoid Inheritance Tax in Spain and in the UK.
    Thank you.

  2. #12
    Senior Member
    Join Date
    Oct 2008
    Location
    Marbella
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    1,095

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    Dear Eddie,

    Spanish IHT has been almost supressed in the Balearic Islands.

    In Spain IHT is called really Impuesto de Sucesiones y Donaciones (ISD)which can be translated for Inheritance and Gift Tax. Gift tax has also been considerably reduced in the Balearic Islands.

    Please read our article on the matter:

    Spanish Inheritance Tax: Advantages of Making a Will in Spain - 3rd of September 2009

    I quote an excerpt:

    "There’s an ongoing trend to abolish Spanish inheritance tax (much like there was for Wealth tax which was abolished last year) fostered by Spain’s conservative party. These trends are always very popular amongst voters. Many regional communities have jumped onto the band wagon and are now applying reductions on IHT to such an extent which in practice translates to almost suppressing it, i.e. Madrid, Basque Country, Navarre, Valencia, Balearic and Canary Islands."

    Regarding the HMRC's IHT liability I suggest you seek advice from a UK solicitor as I'm not qualified to advice on the matter. I can recommend you UK law firms if you wish. In any case the thereshhold in the UK is very ample unlike in Spain.

    From the Spanish legal point of view the IHT tax liability of both your heirs (your two children presumably) would be very low if not nil. I find it futile that you gift them the property.

    If you want a tailored IHT report on your particular case so you can rest assure, please contact us for a quote on the fees for this legal service.

    Yours faithfully,
    Raymundo LarraĂ*n Nesbitt

  3. #13
    Unregistered
    Guest

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    Quote Originally Posted by Lawbird Lawyer View Post
    "There’s an ongoing trend to abolish Spanish inheritance tax (much like there was for Wealth tax which was abolished last year) fostered by Spain’s conservative party. These trends are always very popular amongst voters. Many regional communities have jumped onto the band wagon and are now applying reductions on IHT to such an extent which in practice translates to almost suppressing it, i.e. Madrid, Basque Country, Navarre, Valencia, Balearic and Canary Islands."
    Can you tell me the current IHT rules in Tenerife please?

    My scenario is that my partner and I (not married) would be purchasing a home in Tenerife.

    Eventually we would want the property left to my two daughters. They are not related to my partner.

    Should we leave the first deceased partner's share of the property to the surviving partner, which would then pass to my two daughters with the death of the last partner? Does this cause extra tax if I were to die first, as my partner would then own 100% which he would leave to my daughters, who are not related to him?

    OR each leave our half share to my daughters, with a life interest for the surviving partner in the property?

    I'd welcome your input on this.

  4. #14
    Unregistered
    Guest

    Default

    Sorry, to continue from above...
    My partner and I may be resident in Tenerife, but not sure about this, and this situation may change when one of us dies. The other may want to return to the UK. Does being resident/non-resident have any effect?

    My two daughters will be resident in the UK.

    Thanks

  5. #15
    Ellie
    Guest

    Default Ways on How to Avoid Inheritance Tax on Spanish Property

    With regard to once married, then divorced and now reunited without marriage, how is the iht possition for us
    in Spain?

  6. #16
    Senior Member
    Join Date
    Oct 2008
    Location
    Marbella
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    Dear Madam,

    I believe in Tenerife you have to be resident and have lived there for the prior 5 years to take benefit of a regional IHT exemption of 99,99% in the taxable base, meaning almost no IHT tax is paid.

    However you still have the national law which has a tax exemption of 95% on the taxable base of the main primary dwelling (residence) which requires less years than the above regional allowance.

    If you are not married and are not registered as a couple either you will be whammed with IHT as you are deemed to be non-relatives (friends) or Group IV.

    Please read my article for more details:

    Spanish Inheritance Tax: Advantages of Making a Will in Spain - 3rd September 2009

    Quoting an excerpt:

    Spanish IHT most onerous cases are related to the transfer of large estates or assets bequeathed to distant relatives or non-family members such as friends (Group IV).
    Group 4: Relatives in fourth degree, or withourt any relationship, for example, a friend. Nought.

    Yours faithfully,
    Raymundo LarraĂ*n Nesbitt

  7. #17
    tony
    Guest

    Default Ways on How to Avoid Inheritance Tax on Spanish Property

    I have a UK will bearing my names as beneficiary of fund lodged with a Spanish financial institution by my late grandmother. Is there any tax to be paid before I can have the money?

  8. #18
    Senior Member
    Join Date
    Oct 2008
    Location
    Marbella
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    Dear Sir,

    On what date did your grandmother pass away?

    Yours faithfully,

  9. #19
    bill
    Guest

    Default Ways on How to Avoid Inheritance Tax on Spanish Property

    can you advise on fully paid property left in spain to ex wife worth around 50,000euro how much tax will have to be paid he only lived in spain one year also the cost of tranferring bank accounts into her name

  10. #20
    Senior Member
    Join Date
    Oct 2008
    Location
    Marbella
    Posts
    1,095

    Default

    Dear Sir,

    Regrettably we do not offer as a free query calculating IHT liability.

    You would need to hire us to assess your particular case.

    Yours faithfully,

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