Re: Reducing IHT
 

Yes but you have to remember that the Spanish IHT rules were designed for big Spanish families where by law the property had to be left to the children.

Most Spanish families do not have huge assets and the state allowances, spread amongst the family plus a little help in some of the regions mitigate the tax to a large extent.

Hanging on to the family house is not an issue as you do not normally leave anything to the surviving spouse apart from the right to live in the house so that it effectively cannot be sold anyway and no one wishes to throw their father/mother out on the streets. Expats always compare the rules in the UK where bequests to spouses are almost exempt but in Spain the spouse never gets left anything so it is not relevant.

If you are used to the UK rules then you are quite correct, you should check out the Spanish rules before investing in Spain - unfortunately most do not and at the time they invest the last thing on their minds is death!

Everyone thinking of moving to Spain has the same choice - if you don't like the rules/taxes then go somewhere else - the Spanish are not going to change the rules to suit you. Sadly most potential expats are more interested in the weather than taxes!

Re: Reducing IHT
 

[QUOTE=Fred James;10853957]Yes but you have to remember that the Spanish IHT rules were designed for big Spanish families where by law the property had to be left to the children.

Most Spanish families do not have huge assets and the state allowances, spread amongst the family plus a little help in some of the regions mitigate the tax to a large extent.

Hanging on to the family house is not an issue as you do not normally leave anything to the surviving spouse apart from the right to live in the house so that it effectively cannot be sold anyway and no one wishes to throw their father/mother out on the streets. Expats always compare the rules in the UK where bequests to spouses are almost exempt but in Spain the spouse never gets left anything so it is not relevant.

I do realise that Spanish families benefited from IHT, but nowadays Spanish families are smaller, children leave the family home, people live longer, more women work so it is not as appropriate as it used to be. The usufruct arrangement might have worked well when a widow was very old when bereaved, but if a woman in her sixties is widowed now, she may have another 30 years to live, and would need the money from the sale of the house to have choice and control over her life.If the house is owned by the son, she wouldn't have that;another point to consider, if the son dies before her, and his wife inherits, she may not be sympathetic to the widow's cause. The house still needs maintaining, and when eventually sold there will be CGT-considerable for the owner who is probably non resident;you can't win!So, the present IHT law is now an anachronism, and needs updating to meet modern day demands, both for the Spanish people and others who live in Spain.
It seems that all the methods to reduce IHT, are flawed and involve cost, sometimes considerable cost.
The solution, as I said before is obvious- remaining spouse or partner should be exempt from IHT, relatives should have a decent allowance.

Re: Reducing IHT
 

It would be nice if your solution were adopted, and also, as I've suggested when the subject has been discussed before, it would be good if inheritance tax could be paid from the proceeds of the sale of a property (could be witheld by the notary to make sure it is paid).

However, there is very little point in we expats telling each other what the solution is - the Spanish authorities aren't going to read it let alone act on it!

Re: Reducing IHT
 

Therefore, anyone thinking of moving to Spain should be looking at this subject before thinking how nice it will be to pick your own lemons etc.How many would continue with their plans? It's often a case of-"if I knew then...."

Re: Reducing IHT
 

Of course they should - Fred James is quite right about that. We should all have the sense to find out the situation regarding all kinds of taxes before we take the decision to move to another country (Spain is by no means the only one that has a very different IHT position to the UK). Of course, you can only make a decision based on the facts as they are at that moment in time, things can and do change, sometimes for the better and sometimes not.

But how many times do we read on the forum questions like "what do you mean about non-resident taxes, I bought a property XX years ago and I've never heard of it", and the like?

I could have understood it better years ago when this kind of information would have been harder to come by from the comfort of your own armchair, before the advent of the internet, but there is no excuse now.