Statute of Limitations for Spanish Inheritance Tax

[annmarie mcivor]

My father has died recently and my mother has inherited his share of the house Value on deeds 185,000. Is there a way that she can avoid paying inheritance tax. We have heard that if you do not say anything for 4 years you will not have to pay the tax. Is this true and what happens after the 4 years?

[Lawbird Lawyer]

Dear Madam,

Actually it's 4 years and six months.

After this timeframe has elapsed as from the death of your father you will no longer be held liable for IHT by the Spanish Tax Office.

Please read my article on Spanish Inheritace Tax which has various of links to other articles of ours explaining ways to avoid/mitigate exposure to this tax.

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

Yours faithfully,
Raymundo LarraÃ*n Nesbitt

[Unregistered]

Thank you for your reply - but could you tell me what happens after the 4 years 6 months go by - does she have to pay a tax then. Is she able to sell the house then. Does she inform the authorities after this time.

[Lawbird Lawyer]

You're welcome.

The steps to be taken are explained in detail in my article above. The only difference is that IHT doesn't have to be paid now.

Now what?

Once heirs have all three (original death certificate, will certificate and a notarised copy of the testator’s last will) they may now obtain a Deed of Declaration of Acceptance of Inheritance (“Escritura de Aceptación de Herencia”) before a Spanish Notary. With this deed they are now able to file, pay and lodge the death duties.

Once IHT is paid and lodged, not before that, will the property be registered under the beneficiaries name at the land registry where the property is located. Once registered, the property can be disposed of freely. Heirs cannot mortgage or sell the property to pay IHT as it still doesn’t belong to them.

Yours faithfully,
Raymundo LarraÃ*n Nesbitt

[Unregistered]

sorry about this but she is extremely confused about what to do and is begining to panic about it. I need to be able to explain exactly what will happen in four years time.

So when the four years are up she will not have to pay the inheritance tax approx 9,100 euro - she will only have to pay the cost of changing the deeds into her name - I presume that this can all be done through a spanish solicitor.

[Lawbird Lawyer]

She will need to hire a lawyer to sort it out in 5 years time, yes.

A deed of acceptance has to be signed at a Notary public. The IHT has to be filed and lodged even though it is no longer payable. Only then can the property be lodged under her name.

In any case, as per my article above, IHT payment can be requested to be differed or paid in installments.

Waiting for the statutory limit to elapse has its risks and I cannot recommend it. If you are caught, the Tax office will make her pay dearly.

Directors of bank branches for example are obliged to report to the Tax office the death of an account holder so that the account is frozen until the IHT is settled. You can also read this in my article.

Yours faithfully,