Ways on How to Avoid Inheritance Tax on Spanish Property

[aflores]

Dear Yvonne

If you inherit say 115.000 Euros (50% of the taxable equity), after deducting the maximum allowance (16k Euros), you will be in the 15% tax rate, approximately.

Regarding the Wincham route I´m sure it suits specific cases but, as I pointed out to them, it certainly is no panacea! When one endorses just one legal option objectivity dissapears and with it, credibility (sorry Wincham, my opinion)

[aflores]

Hi Raymond,

Please pass my condolences to your sister in law.

If your brother in law owned, I am assuming, 25% of the property (say 40 thousand Euros), and your sister is inheriting his share, he would be in the 12% tax band. However, since they were married 16k Euros allowance are to be taken off so she is effectively only paying tax on say 24k Euros, which leaves her in the 9% tax rate, around 2.000 Euros. If a company had been used, only the incorporation costs would be twice as much, without mentioning Stamp Duty and running costs. Numbers never lie.

The best option is just to stay as you are as any other mechanisms you try to put in place will just increase your costs, in the long run.

[Tony King]

Hi
I asked the question below but have had no response as yet. Is there a reason why?
Kind regards
Tony

Tony Says:
Wed, Aug 25th 2010, 19:50

my father has a property in tenerife, he is no longer able to travel there and has decided to transfer the property to myself and my brother, both resident in the uk. Is this a wise thing to do?

[aflores]

Dear Tony

Apologies for the late reply.

This is a possibility you can do but it can be costly and also, the transaction could be considered to be null and void as a real sale is not taking place. The truth is that very few transactions get nullified for this reason but it is important to keep in mind.

I advise that you do the math to see if inheriting would far more costly than buying/selling. If you advise on figures I can help you with this.

[pauline]

Do you have to claim a property in spain if you are the first in line of inheritors.
My dad left a half share of an apartment with a large mortgage and I do not wish to be involved and do not want anything from the property. I f no one claims it will the Spainish government get the half share and then what happens.
Thanks

[aflores]

Dear Pauline

In principle this would be the case, by reference to applicable law. However, ti is unlikely that they (Spanish State) does find out unless of course they are told about it, by the other share owner.

Presumably the owner of the other share will be interested to know where the other half goes because, if you think about it, his own share is worth almost nothing without the other, as who would by into a property in these conditions, that is, buying 50% of it? This would cause all sorts of problems and is not all attractive, unless the price is so low that you can't refuse.

I suggest that you renounce to your share for a fee or sum, in favour of the other share owner, who should happily pay for it. How this is done will depend on whether he is also an inheritor of some type, as otherwise you have to accept it and then sell it.

Let us know what you wish to do as we are interested in knowing, after all we have not come accross a situation like this one before!

[pauline]

Dear affores
Thanks for your answer but the other share owner is not an inheritior as was his ex partner. I am not in a position to claim the property as I do not have any money and will also incur debts with the property.
I also am not in a position to put my name on a mortgage in Spain.
My sister and I do not want to get involved (she has no money either and is living in America).
Can we just not claim the property also we would not mind the other person having my Dads share but to sell it to them would mean that I would have to claim it first. This would mean paying tax, legal fees, debts on the mortgage and being liable for half the mortgage. There does not seem to be anyway to sort this problem without paying out money that I do not have.
Please help - how can you renounce your share if you have no money to claim it. I am happy for the spainish authority to have it as there does not appear to be anyway to solve this.

Thanks

[inge]

I have been told that as a Spanish tax payer (from the UK) working in Spain but due to retire that if anything happened to myself or my husband we would not pay inheritance tax. We live in Barcelona and own a house in Tarragona and a business in Barcelona. Is this correct?

[mr rossi]

Hi there, thanks for the information, really helpful.
My parents have a property in spain, Valencia, worth roughly 300,000E and 2 children.
They have been told that we can lower our IHT if I register in spain with a residencia number.
Is this true? From reading your posts it seems like IHT has been reduced by 99.99% but only if is passed onto someone resident in spain (both inheritors are living in UK). Do i need to do more to be resident in spain, or will this not help?
Thx in advance

[Jim Walters]

My mother died a few years back and I believed I owned the property in Spain with her jointly. It terns out her name was the only name on the deed. She also left no will. What can be done. I am the only child and my father does not have any interest in the property