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Old Sep 10th 2021 | 2:41 am
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Default Spanish property query

I'm a forum newbie so go gently please if I say or do something wrong!

I have a family member, who lives in the UK, who has a self-built property in Spain which is currently used as a holiday home. As he is getting on a bit and has told us he will be leaving us the property (sorry to be so blunt), he has suggested that me and my partner look into the best way to be able to arrange ownership.
He has never organised residency or citizenship for himself and I don't think he has any plans to do so, unless there is an easy route for retired people to achieve this. He seems to think there is a straightforward way for us to get either resident or citizenship status but that's not what I can see from doing some research.
If I have read things correctly, it appears that Spanish inheritance tax rates are pretty high (the property is over 500k euros) so leaving it as part of his estate doesn't look like a sensible option?
I have no idea how property ownership works in Spain. Would it make sense for us to be added to ownership deeds(?) now to remove the risk of being clobbered with inheritance tax?
Although we wouldn't be looking to do it yet, it is certainly somewhere we would be happy to retire to in the future, maybe within 10 years or so.
Any advice would be greatly appreciated and I apologise in advance if I've posted incorrectly or asked anything I shouldn'tme have.
Thank You
 
Old Sep 10th 2021 | 8:42 am
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Default Re: Spanish property query

Where is the property as this will affect IHT?
 
Old Sep 10th 2021 | 8:28 pm
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Default Re: Spanish property query

Originally Posted by Fred James
Where is the property as this will affect IHT?
I agree about location.

Are there actually any differences between gift tax rates and succession tax rates?
 
Old Sep 10th 2021 | 8:31 pm
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Default Re: Spanish property query

if you become joint owners before he pops his clogs then perhaps you could avoid paying IHT.

But that could also deemed to be a gift and you might have to pay tax on that.
 
Old Sep 10th 2021 | 8:52 pm
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Default Re: Spanish property query

Before having your names put onto any ownership documents it would make sense to check that he had the relevant permissions and licences for this self built home.

Rosemary
 
Old Sep 10th 2021 | 11:01 pm
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Default Re: Spanish property query

Originally Posted by snikpoh
I agree about location.

Are there actually any differences between gift tax rates and succession tax rates?

Yes, huge differences. For example, in Andalucia, the basic allowance is €1 million and that applies to gifts as well.
 
Old Sep 11th 2021 | 8:01 pm
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Default Re: Spanish property query

Hi, sorry for the delay. The property is in Malaga province.
 
Old Sep 11th 2021 | 8:03 pm
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Default Re: Spanish property query

I’m hoping it’s all OK, as far as I know he went through all the proper channels. It was actually built about 15 years ago.
 
Old Sep 11th 2021 | 8:47 pm
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Default Re: Spanish property query

Also what is your relationship to the owner? Important as it affects the taxes.
 
Old Sep 11th 2021 | 9:17 pm
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Default Re: Spanish property query

The owner is my girlfriends uncle. Just to confirm, we’re not expecting him to “pop his clogs’ anytime soon, he’s only 66, but he is adamant we research the most sensible options.
 
Old Sep 11th 2021 | 9:50 pm
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Default Re: Spanish property query

Originally Posted by MattyEllis
The owner is my girlfriends uncle. Just to confirm, we’re not expecting him to “pop his clogs’ anytime soon, he’s only 66, but he is adamant we research the most sensible options.
Well you are both quite far down the line of closeness to the person. This means that you will be taxed fairly heavily in Spain. They have a sliding scale but basically any gift even to things like wife a children is technically taxable. You need to get good reliable help from a Spanish tax lawyer before you arrange anything as you could find yourself with a large tax bill and lawyers bill but a property that is impossible to sell ( disputes over land -rights or 3rd party claims) . Spain can be a nightmare for rural properties and succession so proceed with caution
 
Old Sep 11th 2021 | 11:14 pm
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Default Re: Spanish property query

Originally Posted by Fred James
Yes, huge differences. For example, in Andalucia, the basic allowance is €1 million and that applies to gifts as well.
Sorry Fred, not being awkward but what's the difference then? "1€ million allowance for succession tax AND for gift tax" - ??

Last edited by snikpoh; Sep 11th 2021 at 11:18 pm.
 
Old Sep 11th 2021 | 11:31 pm
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Default Re: Spanish property query

Most regions that offer reasonable IHT allowances do not offer the same for gifts. Andalucia, unusually offers the same allowances for both.
 
Old Sep 11th 2021 | 11:37 pm
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Default Re: Spanish property query

Originally Posted by Chipmonk
Well you are both quite far down the line of closeness to the person. This means that you will be taxed fairly heavily in Spain.
The property is in Málaga and the IHT and gift tax allowances are very generous as I previously posted. In the last month these allowances have been extended to nieces and nephews, so there shoud be no tax payable either on inheritance or if the house is transferred as a gift.
 

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