British Expats - Spanish Inheritance Tax

British Expats (https://britishexpats.com/forum/)

- Spain (https://britishexpats.com/forum/spain-75/)

- - Spanish Inheritance Tax (https://britishexpats.com/forum/spain-75/spanish-inheritance-tax-412681/)

Re: Spanish Inheritance Tax

Quote:

Originally Posted by culchie

You're right, of course. I was talking to my lawyer about this recently - one can put a clause in the will allowing the sale of the property in certain circumstances (e.g. medical costs etc) where the recipient of the uso fruto can realise the value of the property but then becomes liable for the appropriate tax.

Hi culchie,

It was my intention when our villa is completed to draw up mirror image wills for my wife and myself each leaving our own half of the property to the three children equally but with a "usfruct" in favour of the surviving spouse in each case.

What I wonder is this, does a "usfruct" (in effect a lifetime lease) have the same effect that it would in UK, and severely depress the value of the property on the first death so that it would be doubtful if there was any IHT liability?

My thoughts are that if the property was valued on the open market at say €300,000 and one half passes on the 1st death €150,000, that would be €50,000 for each child but with a "usfruct" that would only be worth say €25,000 and with the allowances available in Andalucia perhaps be below the IHT threashothreshold
Are my suppositions in the wrong ball park?

Regards,:confused:

John.

Re: Spanish Inheritance Tax

Quote:

Originally Posted by John & Kath

My thoughts are that if the property was valued on the open market at say €300,000 and one half passes on the 1st death €150,000, that would be €50,000 for each child but with a "usfruct" that would only be worth say €25,000 and with the allowances available in Andalucia perhaps be below the IHT threashothreshold
Are my suppositions in the wrong ball park?John.

The value used for IHT is usually based on the catastral value multiplied by an coefficient which is available from Hacienca and varies from place to place.

The end result is likely to be a good deal less than the market value. IHT like other taxes in Spain is by "self declaration" so unless the value declared is widly out of line then that will be the value used.

The allowances in Andalucia are now 125,000 euros as opposed to the usual 16000. Based on the figures you have quoted I don't see IHT being a problem for you even if you leave the children out of the equation.

Note that the increased allowances are only available to residents and if the children want the allowances they also have to be resident (in Andalucia).