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Thread: Spanish Inheritance Tax: How much is it?

  1. #1
    sandy
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    Default Spanish Inheritance Tax: How much is it?

    This is the discussion thread for the article Spanish Inheritance Tax: How much is it?

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    I have read several conflicting pieces of advice with regard to the treatment of stepchildren in Spanish Succession laws. Some advisers say they are treated the same as no relation (Group 4) and some say they are in Group 3. How can I find out the correct position. It makes a big difference to me. The property in question is in Andalucia.

  2. #2
    Junior Member
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    Congleto Cheshire/Calpe Spain
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    Default Stepchildren

    You are correct Stepchildren are classed as Group 4 unless they have been legaly adopted

  3. #3
    jill payne
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    Default Spanish Inheritance Tax: How much is it?

    please could you advise as to which group my cousin would be classed in
    She is my mothers brothers only child
    Ihave recieved differant answers and need the correct one please

  4. #4
    Senior Member
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    Default

    Dear Jill,

    You are probably receiving conflicting replies because you may not be asking the right question.

    Who is the one bequeathing their Spanish estate? You, your mother, or your mother's only brother? Depending on your reply then we can determine the degrees of kinship which will in turn translate into your cousin being included in one group or another for tax allowance purposes.

    Yours faithfully,
    Raymundo Larraín Nesbitt

  5. #5
    dorozi
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    Default Spanish Inheritance Tax: How much is it?

    We have spanish wills but what happenes regarding inheritance tax if one of the partners die, we have 4 adult children that live in the UK.

  6. #6
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    Default

    Dear Dorozi,

    If one of you dies, the surviving spouse is not exempt form paying IHT in Spain.

    If the survivor is fiscal resident they can qualkify for a tax allowance of 95% on thier taxable base. In addition some regions in Spain raise this tax allowance to almost 99,99% meaning there is no tax to be paid.

    Regarding the children it pretty much depends who are the appointed beneficiaries in your last will.

    What is the content of your will? Who are the appointed beneficiaries? Do they inherit in equal shares?

    Spanish IHT is a fairly complex and technical matter as multiple parametres need to be taken aboaed to do the calculations.

    Yours faithfully,
    Raymundo Larraín Nesbitt

  7. #7
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    Default Spanish Inheritance Tax: How much is it?

    Hi, My parents purchased an apartment in Costa del Sol spain about 16 years ago, we live in the uk. They are both on the deeds and do not have a spanish will. My dad died 7 years ago and the apartment was not mentioned in the will. Obviously his estate went to my mum. The apartment was bought for £35,000 and at my dads time of death would have been worth about £95,000. Would my mum have to pay approx £10,000 in capital gains tax? Also we have only been made aware that there is a wealth tax, how much is this per year? This may have been paid for the first two years only. Also, what documents would we need to bring to a spanish lawyer?. My mum would like to leave the apartment in her will to myself and my sister, what would be the easiest way of doing this, or can we purchase it of her? I know this is a lot to ask all at once, any information would be a great help. Kind regards, Beverley

  8. #8
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    Default

    Dear Sir,

    You're right, lots of questions.

    First of all your father passed away in 2003, therefor neither Spain's IHT ("Impuesto de Donaciones y Sucesiones", or ISD for short) nor Plusvalía Tax is no longer payable; although your lawyer will have to both file and lodge it at the Land Registrar regardless.

    Wealth tax is a tax that although is still active has been surpressed as from the 1st of January 2008:

    Spanish Inheritance Tax Abolished? I’m Afraid Not! 19th September 2008

    What you are really asking me is how much is the imputed income tax on the Spanish property. As a rule-of-thumb its 24% of the 2% of the cadastral value. The cadastral value is a value taken for real estate assets employed to calculate different taxes whether national, regional and local. You'll find the cadastral value for your mother's property in any IBI receipt. More on this:

    Up to 300% Increase in Property Taxes in Malaga in 2009 -12th September 2008

    Your mother can either bequeath you her Spanish estate or else you can buy it outright from her, yes. I would need all more information on the matter to give you an informed advice.

    Buying it outright would be approx 10% of the value of the property without a mortgage and 12% with a mortgage. The Transfer Tax payable is 7% for the buyer and the vendor pays both 19% CGT and Plusvalía tax.

    We can asssit you both in the conveyance of your mother's property as well as drafting her Spanish last Will.

    Please contact us if you want more details.

    Yours faithfully,
    Raymundo Larraín Nesbitt

  9. #9
    Junior Member
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    Default more questions

    Dear Sir,
    Thank you for your speedy reply, it is greatly appreciated.
    Mum thinks she has to buy dads half of the property as both names are on the deeds, is this true? Could you give her a rough idea of costs incurred to take dads name off the deeds and to make a spanish will, leaving the property to myself and my sister and all taxes involved in this? She is very worried about the costs involved. Mum is travelling to Spain in May and was hoping to arrange a consultation. Can I email you with details if possible?
    Thank you
    Beverley

  10. #10
    Senior Member
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    You're welcome.

    Sure you can e-mail me the details and set an appointment with me: contact form

    Your mother would be right if your father was still alive. If he were alive the most efficient solution possible from a tax mitigation point of view would be to follow what is known as a "Dissolution of Joint Property Ownership" (DJPO, for short) which only attracts 1% Stamp Duty on the full property value waiving de facto 6% Transfer Tax. More details on this DJPO procedure in my article:

    Dissolution of Joint Property Ownership in Spain - 14th November 2007

    However, as your late father passed away seven years ago, following what you write, a DJPO cannot be followed.

    An estate of transfer to heirs must be followed. More details in my article:

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

    The legal service is explained in detail here:

    Estate Transfer to Heirs


    Yours faithfully,
    Raymundo Larraín Nesbitt

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