Spanish Inheritance Tax: How much is it?

[Lawbird Lawyer]

Dear Rosemary

It would be an excellent idea if it weren't for a small detail.

You still have to file and pay taxes on selling the property. And it would be you through your legal representative who would be doing this.

He, knowing fully well that you have passed away, would have to pretend you are still alive on selling. This may cause him legal problems with the Spanish Authorities if caught.

The POA is no longer valid on you dying if the proxy knows you've died. A son, your son, would logically know you've died on selling the property. Its a risk he's taking.

In any case let me write once more that Spanish Inheritance tax has been grossly overblown over the last couple of years by a minority with vested interests in scaring people to hire their services to waive paying IHT. Normally this service is a one-trick pony, meaning they only give you THE one and only solution. When in fact there are many legal tools available to mitigate exposure to Spain's dreaded IHT:

Ways on How to Avoid Inheritance Tax on Spanish Property - 22nd June 2005

IHT is high for the follwing groups of beneficiaries:

1. Non-relatives (i.e. friends)
2. On inheriting large estates
3. On the inheritor being non-resident in Spain (i.e. domiciled in the UK) and therefore cannot take advantage of lenient regional tax allowances in combination with one or both points above. This bars them from benefitting from generous regional tax allowances in lieu of the more draconian State law. However some regions in Spain require you have taken resident status for a number of years prior to the death, i.e. five years.

Please read my article on IHT in Spain for more details:

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

Sincerely
Raymundo LarraÃ*n Nesbitt