And a lot of cost with gift tax or transfer tax!

Children still pay inheritance tax, so depending on the value of the asset some will be due.

By leaving it to the children one generation is missed out so in effect tax is saved as only one lot of tax is payable before the money reaches the children.

On the other hand, if the children are non residents they will pay a higher rate of inheritance tax than a resident, so the difference may not be significant.


From what I understand a child will be allowed about 16k without inheritance tax, then will be taxed at differing amounts above that figure, depending on the value of the estate.

So if the inherit a UK house worth 150k they will pay over 18% tax on the 134k above the allowance. Over 25k to hacienda, I may be wrong, but that is how I read it.

This explains a bit more......

http://www.eyeonspain.com/spain-maga...e-tax-law.aspx

PS the comments are very interesting, a few hurdles are talked about that would also complicate things further.

Sorry for any confusion, I was refering to UK assets only and Kids who are UK residents. I agree that in respect of Spanish assets, there is little one can do to reduce the tax burden

When you say gift it back what does that involve?Surely a hefty amount of gift tax!I think that would make things very complicated.

Mike we are of the same thought as yourself if/when we become resident in Spain we will change will instead of me or wife getting 50% of house that share will go to our daughter at least that way she gets that property without tax. I have no problem with Spanish property IT as their country their rules.

If you still own 50% then you are entitled to use it when the other 1 passes on final 50% goes to daughter. Only problem could be daughter doesn't want you to live there. That will not be a problem with my daughter I know plus it would probably be rented if we were not living in it, ok so whoever survives has to pay a share of any rental as income tax to Spain.

bob22-surely when you both die your daughter will have a huge amount of IHT to pay.What if you died and your wife wants to sell the house?There are so many if's and but's to this and lots of solicitors don't advise it.If you leave everything to your wife, there is the standarrd allowance, about 16000 euros plus a regional allowance, varies in each county. Your wife will probably pay very little or maybe nothing!

Gift tax in UK would only be a problem if the donor died withing 7 years of making the gift (and then only on a sliding scale) which, hopefully, should be of low probability as the gift is from a child to a parent.

Bob22 -you said you would leave your 50% to your daughter so she would pay no tax, but surely she would pay IHT and quite a lot, as non resident?

Sorry Neptuno I am talking about our UK property. The Spanish property yes there will be IHT tax to pay on that but we have accept that

Let me make this crystal clear.

The only person that will ever pay Spanish inheritance tax on a UK property is a Spanish tax resident who inherits the UK property.

For a Spanish property, anyone who inherits will pay Spanish tax irrespective of their tax residency.

At last - ta Fred

Nope, but this one is...

http://britishexpats.com/forum/showthread.php?t=328608

That thread had fewer posts than the asset thread but more viewings.

Also it ran for three years before it was closed but this one only ran for 5 months. Many of those extra viewing numbers would have come after it was closed.

Either way it does indicate just how well both threads have been received and hopefully many people have benefited from the advice given in both of them.

There is no problem with this in the UK as you gift it as a sensible age and therefore the 7 year rule comes into play, know people who have done this very effectively and has been a system tax advisers have used for many years. So no costs involved.

Ivanmax in the thread rugbymatt links to back in 2005 must have had a crystal ball !