IHT and unmarried

[landlubber]

What difference does it make if a couple own a house in joint names are resident but unmarried when one of them dies as far as IHT is concerned ? Thank you in anticipation, Landlubber.

[Lawbird Lawyer]

Dear Sir or Madam,

It can make a huge difference because on being unmarried. Meaning your beneficiary/partner will be regarded as a non-relative and be classified in Group IV for IHT taxation purposes (no tax allowance applicable).

In Spain the national laws establish there's a tax allowance of 95% when it's your spouse (Group II) to which the main residence is transferred over to. However it is required they withhold ownership for the next 10 years. If they sell it on before the deadline they will have to pay Spanish IHT. In addition Group II memebers have a state allowance of almost 16,000€.

Regarding regional laws, If you happen to have been a fiscal resident in Spain for the last 5 years (different regions apply differing timelines) you can take advantage of regional tax allowances which tend to be superior to those offered by our State laws. i.e. in the case of the region of AndalucÃ*a you can have a tax allowance of 99,99% on the main residence (family home).

As you can see your civil status and fiscal residence status may have a huge impact on the Spanish IHT taxation of your beneficiaries. Planning fiscally ahead is a wise idea. Death and taxes.

Other unmarried couples register themselves in a civil partnership to take advantage of these tax allowances for this very reason.

But if you are neither married nor have a civil partnership your partner will be heavily taxed.

Yours sincerely,
Raymundo LarraÃ*n Nesbitt