Fred James

Firstly, I think you are referring to Gift Tax, which is the same as IHT. Transfer tax is what you pay when you transfer ownership of a property, either by selling it or gifting it. It can be as high as 10% in some regions.

Under certain circumstances, such as transfers between a spouse, it is reduced to 1%.

If you give the property to your kids, there may be local rules that allow a reduced transfer tax, but it is the gift tax that is the real problem. Under the state rules, the tax is the same as IHT so by gifting it to the kids would save no money, and worse still, the tax has to be paid at the time of the gift.

That said, the tax breaks can vary enormously from region to region making it perfectly possible to gift the property to the kids with no tax to pay. This is probably what happened in the case you mention.

However, it is not a way of avoiding IHT as under the same rules, no IHT would be due either. Of course, bearing in mind that the rules in some regions have recently changed for the worse, gifting the house when the rules are in your favour might be a good bet.

missile

Another option is to buy your property using a limited company. Maybe a good idea for some?

snikpoh

Thanks Fred, yes I meant gift tax and not transfer tax.

As you know, we are in the region of Valencia so I assume the tax breaks here must be good.

Could it possibly be age related as well?

marcbernard

#17
Be aware that the purchase of a house in Spain via a UK company has recently been declared illegal under certain tax laws, in Spain. There were in any event certain costs and dangers inherant if following the adverts of a certain W..... company well advertised in the local expat press.

HBG

Costa News - 15 August 2014

It seems unusual to post such a letter, but it really does sum up the current difficulties faced by expats.

I don't feel I need to add any further comment, but just like last year, a lot of expats are packing their bags.

Neptuno

Can you tell me what this as about as when I press your link, I get a blank page

Fred James

Well, perhaps they should check out the real situation rather than the rubbish that is published in rags like RTN and CBN.

There is NO proposal to change the existing rule where residents over 65 can sell their prime residence with no CGT to pay.

What the government is proposing is that the over 65s who also have other assets such as second properties, stocks and shares etc, which at present are liable for CGT when they are sold, should be exempt from CGT if they reinvest the money in a government approved pension scheme.

That sounds like a positive more, rather that the negative situation that the Scaremongers are suggesting.

Neptuno

I emailed the RTN and asked them to correct their misleading article in this weeks edition . They didn't
The general opinion on other forums was not to believe what is written in the freebies.
As many are not fluent enough in Spanish to read and make sense of the original a Spanish legislation, who can we trust?

HBG

The letter is the first letter in this weeks Costa Blanca News. The Costa Blanca News is not a freebie riddled with adverts, it is the only paid for expat newspaper and the most informed voice for British expats in Spain, and has been for at least 20 years now.

Perhaps the most important part of this excellent and informative newspaper is the comprehensive clubs and charities section listing all those voluntary organisations which exist purely to help fellow expats.

What expats suffer from is the misinformation doing the rounds, either misinformed or even downright malicious. I've got to sadly say that some of the tax advice on this otherwise helpful forum is atrocious and will lead to serious financial loss if followed.

scampicat

My friend in Spain was widowed just after Christmas. Their house is in joint names.

Will she have to pay any IHT or other taxes connected with the house (permanent residents)?

Fred James

Would you care to be specific and identify any posts that you think are atrocious, rather than just give a general opinion. Also it would be helpful if you could identify the errors and suggest corrections.

Fred James

Probably not, but it does depend on the value of the inheritance.

So long as she retains ownership of the house (she does not necessarily need to continue to live there) then there is no tax to pay so long as the amount of the inheritance was less that €175k.

That is the law in Andalucia - other regions have different rules which may be more or less favourable.

Neptuno

Allow me to explain.
I read the letter in the CBN, which I have read for years.The writer is referring to an article published in the
Round Town News, southern edition, the previous week, which wrongly stated that ex pat pensioners WOULD lose their exemption from CGT.
I don't know why the writer wrote to the CBN instead of the RTN, as there was no mention of the subject at all in the CBN, surprisingly.
As I said, I emailed the RTN to complain , still awaiting a reply.
The general opinion of these free papers is not good.
Many people believed the article , and it has caused unnecessary worry.

Neptuno

Hopefully the person concerned doesn't live in Murcia, where there is NO regional allowance, in which case the bill may be very high, as it will be on the value of the worldwide assets.

scampicat

She lives in Granada province.

Thanks for your input, and also Fred James, very helpful.