Fred James

Afraid not!

IHT is always paid on any Spanish assets including those owned by non residents.

Non residents ONLY pay on their Spanish assets, residents pay on their world wide assets.

Non residents do not get any of the tax breaks available to residents, either the national ones or the regional ones.

The basic allowance is only 16k for spouses and children. Other relatives only get half the allowance and non relatives get no allowance.

The tax rate for other relatives is increased by 59% and for non relatives it is doubled.

The tax is in 16 bands and the highest rate is 34% - 68% for non relatives!

An inheritance of 120k would pay 15.6k and one of 240k would pay 40k. Again, double that for non relatives.

lynnxa

- but less so

thanks anyway..............I knew I shouldn't have got involved in this one

snikpoh

This is the main difference between UK IHT and Spanish Succession tax. In UK, tax is paid from the estate whereas in Spain, tax is paid by the person inheriting.

This is also why there are SO many empty properties. If the person inheriting them can not pay the taxes, then they are able to refuse the property and it is simply left to rot. I have often wondered who actually owns these properties and how one would go about purchasing one?

jackytoo

When an old Aunt died (in the UK) there were 6 of us as inheritors. The spanish property was a nightmare to sort out. Can't remember the exact percentage but the spanish tax was so high we finished up with less than 50% of it's value by the time it was sold. In todays property market inheritors could find themselves having to lay out thousands for years

I am always suprised how many ex-pats say they aren't resident in Spain when clearly they live there all the year. Do they think they can pick and choose where to pay their tax

snikpoh

.... when you also factor in the IHT issues, it always amazes me as to why ex-pats don't declare themselves tax resident in Spain.


Two certainties in life - death and taxes so be prepared for them both!

DENISE WALTERS

I just want to make it clear on this thread that I pay non resident tax and am up to date see the other thread lol:

snikpoh

Unfortunately, being non-resident (ie. here less than 183 days in any year) and not having a spouse or any children to leave your inheritance to, I suspect both your Spanish succession tax and (possibly) UK IHT will be quite high.

As Fred said above, it can be horrendous which is why I always make friends aware of the implications of living here and not being tax resident. Obviously, if you only live here for part of the year and your main home is in UK, then it may be beneficial to be registered for tax in UK).


[EDIT]: Just re-read your post and I see you are paying non-resident tax - does this make you 'tax resident' I wonder? Maybe Fred has a view on this as I think I am now confused

Fred James

No it doesn't - only non residents pay the non resident "imputed rental income" on their property.

Residents don't pay it - it's a non resident tax it's even called that in Spanish.

If a tax resident has a second property he does pay a similar tax but it is declared as part of his normal tax declaration.

Lospacoshombre

Hi
I have just been looking into this, for my parents who own a property in Fuengirola. I saw our gestor who basically said:

If you inform the authorities of the death of the owner, as long as you keep the property for 5 years afterwards ie rent it out or live in it, it becomes free of any IHT.

Apparently this is why properties remain in Spanish families for years with relatives living there forever, and they avoid any tax at all.

please correct me if I have mis understood

Regards

Al

snikpoh

This can't be correct surely?

If I die and pass on my half of the house to my wife, if she then lives in it for 5 years there's no succession tax to pay????? I think not!

Surely as soon as a property changes ownership, then they have to pay the 7% property tax at least???

Mitzyboy

Thats (more or less) exactly the situation in Valencia Prov. Our neighbours husband died some 5 years ago and they were joint property owners. She still lives there and has paid no IHT / tax. Its all been done correctly through the lawyers etc

EsuriJohn

That can't be true can it?

Lospacoshombre

we have looked at handing over the property to us kids and the following is extracted from an email:

"Thank you for your email of which i have taken note.
Based on the figure of 220.000 euros, there is a 7% transmission tax to pay, the notary say about 600 euros and the land registery another 600 euros.
Then you have to Plus Valia tax to pay at the Townhall, but it all depends on how long your father has had the property and the catastral value. (if you email me a copy of 2011 IBI receipt I can work it out for you)
Also as he is non resident there will be capital gain tax to pay between whatever the amount he bought it for and whatever the amount he sales it for, taking the years that he has owned it into account."

But if we kept the house and my dad passes it goes to my mother and she survives 5 years then she passes it is passed to us kids in another 5 years, with no iht . That was my understanding, and please bear in mind it would also add to the Uk estate which is where the complication begins.

regards
Al

EsuriJohn

I think it is more related to the Napoleanic forced inheritance laws. This spreads the ownership between ever more family members with each generation. We have friend who wanted to buy a ruin which had fallen into decay in a prime street in Ayamonte. they worked very hard and discovered that there were now 39 owners 38 could be traced and agreed they would sell the 39th was not found lives somewhere in America so no sale. It just declines and becomes more unsafe with each passing year. It disfigures the street but is not alone there are others in similar condition I assume for the same reason. In UK it is possible to go ahead with the transfer of ownership in similar circumstances with an insurance policy to indemnify the absent owner.

JLFS

That is the trouble with minifundism........more owners and less property each, sometimes these things take lifetimes to be resolved.....