Hi Everyone,

I am new to this forum and very interested in the answer to Kevin's question if anyone has it??

Many thanks

Tricky one Kevin.

If you were resident then the best move would be to form a civil partnership. In Spain it applies to same sex couples and also to mixed sex couples.

This would give the same rights as a married couple so you would have the option to retain the house for 10 years and not pay the tax however this option only applies to residents.

The tax is doubled for non related inheritors so at least that problem would go away if you had a partnership.

The other option is to go down the trust or company owned route where the property is owned by the trust/company and you are shareholders. Have a talk with one of the many companies who advertise these solutions.

Thanks Fred
You say double the inheritance for non related,what would that be?

I have thought of a couple of options,what if one bought the house before the other dies,what if one takes out a Morgage before,would you get a low value or a high val?
Regards
Kevin

Kevin, there are 16 different bands for IHT starting at 7.65% going up to 34% on anything over 800k.

In simple terms an inheritance of 120k would pay 15k and an inheritance of 240k would pay 40k and an inheritance of 400k would pay 80k.

Cousins/uncles pay this tax multiplied by 1.6 and non relatives pay twice the amount. It is also increased to 2.2 times if the beneficiary is not related and has personal assets of more than 2m. so the maximum rate of tax is nearly 80% in the extreme case.

There are some allowances before the tax kicks in - everyone gets 16k but depending on the region of Spain it can be much higher.

Either way, as you can see from the figures, it is a tax well worth avoiding!

The upside is that the value of the house used by the taxman is often much lower than the real value. It can be calculated on the basis of the catastral value multiplied by a factor depending on the location - typically 3x the cat value. If you declare a figure in that ballpark it is unlikely to be challenged.

A mortgage clearly reduces the value.

I am not sure I understand what you mean by "buying the house before the other dies". Do you mean an existing house or a new purchase?

If you bought the existing house you would have to do so at the full market value or the difference could be taxed as a gift. Also the money you paid would just become another asset and be taxed unless you spend/hide it and remember that being an official transaction you would have to show where it went.

The various discussions and suggestions so far on this subject do emphasise the need for forward planning to avoid IHT. It is pretty simple to set up the right options before you buy property or other assets in Spain but it is much more difficult to rearrange everything after the event.

Fred Thank you very much,this has clarified a lot.

The option to me would be to morgage for short term and then pay off,reducing IHT
My problem would be the house has a value of (estate agent )1.2 Mil Euro and that is a lot of tax?

Could there be any other way round?

Regards
Kevin

The mortgage will only help if it is in place at the time of death of the owner.

As I said, the value for IHT will probably be lower than the 1.2m.

You declare what YOU think it is worth and if it is within the guidelines then you will probably be OK but there is always a chance it might be queried but they will then assess the value and ask for the difference.

Apart from the "Company/Trust" approach I don't know of any other options - although I am sure they will be some.

I suggest you talk to a lawyer.

Thanks Very Much Fred?
Regards
kevin

Hi
If you already own this property, and remortgage, thus raising money on it, this will not reduce any IHT as this money will be included in the value of your estate?
lmj

But not if you put the money in an offshore trust, these are very tax efficient for Spanish taxes and are perfectly legal another is certain types of bonds which are favoured by the Hacienda.

This whole thing about your husband/wife when one dies terrifies me to death.

How are you supposed to go to the banks & take out an account in your name then transfer money to your new account while you are in a state of shock & grieving over the loss of your loved one before telling the authorities. We have 3 bank accounts here.

What are you supposed to live on, air.

My husband is 14 years older than me & will be 80 next year. We have been married 38 years. But when him/her upstairs calls you you have to go.

We have Spanish & English wills leaving every thing to each other, & we live here permanently.

As for inheritance tax, that's a different story & I don't understand it.

Wendy x

Hi Wendy Nesbeth,

Kath and I have been married 40 years this year and have had a joint account for 41 years and we had no intention of changing that but when we come over to Spain I have almost decided that we will have separate accounts probably in different banks mine the major one with most deposits going in and hers with say just her state pension paid in each week/month so that if something happened suddenly she could at least afford a ticket to England to be with the children.

It is no wonder the Spanish don't declare the death to the bank until they have emptied the bank account also since wealth tax is calculated on the balances in the last quarter I bet Spaniards have large ammounts of cash at home from Oct - Dec!

Regards,

John.

The best way for any UK domicliled person to deal with Spanish Property ownership is to transfer the property into a UK limited company , this means that if one partner dies there is nothing to do in Spain no Lawyers no IHT no hassel .the cost is low compared to the savings .time and anguish to the partner

hi i am new to this site and wondered if any of you could please give me some advice
my mum and her partner moved to spain 4 years ago my mum bought a house solely in her name and also still owns one in england they both have spanish residencia her partner is a lot younger and has never worked either in spain or the uk my mum made it clear she was only with him for company and on her death would be left nothing as all her money came from my dads estate my brother who is 30 also lives in spain
the problem is my mum has a brain tumour and hasnt got long left to live her partner has taken all her bank cards abbey accounts in uk and the cajamar which her pension is paid into and also wants the houses in spain and uk we dont know what to do where do we stand and what lawyer do we need uk or spanish as my mum has left no will any advice would be welcomed

Sorry to hear of your problem.
I think the best bet is to get a lawyer straight away, cancel all her cards and inform the banks that they are being used illegally.
I think under Spanish law if they are not married then everything goes to the family anyway, but as I say this is a case for a lawyer and not really a website.
Good luck.

denise1488

Hi I have pm'd you with some info, you will not be able to pm me back as you need to port 3 times before you can. By the way welcome to BE