Spanish Inheritance Tax

[Disorderly]

My wife and I are retiring and are planning the purchase of an apartment in PP, for our own and family holiday use only as non residents. This Forum has been invaluable to research the costs involved in buying, locating a local solicitor, choosing a bank and understanding ongoing costs and taxes.
As a result, we have a good grasp of all that and are coming out in March and April to seek a property......we feel so lucky to be able to finally do this.

However, there’s one thing I can’t get my head around (though I suppose the solicitor will) and that is the inheritance tax question. We are a married couple planning to buy in joint names (though that involves two NIE numbers and annual returns as I understand it), and we have two grown up sons ( our sole beneficiaries).

So here is where I’m struggling......if one of us snuffs it, what’s the Spanish inheritance tax liability. I’ve read countless articles and remain thoroughly confused. Any ideas?

 

[Rosie34]

I am sure someone will be able to give you detailed advice on this one - but I do know from our own experience years ago that it is very important to make a 'Spanish' will regarding the property. Best of luck with your new venture

 

[Disorderly]

Thanks Rosie.....good advice.

 

[Deanscroft]

When making a Spanish Will if you are non-Spanish, non-Resident, be sure to include the phrase 'Estate to be dealt with under the inheritance laws of the United Kingdom'. If the will doesn't include this then it will be governed by Spanish law. Under Spanish law your estate is divided up according to a formula set down here which will not necessarily be how you want it divided. Very broadly under Spanish law the first third goes to the first direct heir, the second third is divided equally amongst all the direct heirs, and only the last third can you decide.

 

[Disorderly]

Thanks Deanscroft. Where I may be confused is that I gained the impression that even if one makes wills as you suggest, there is still a tax liability on the beneficiaries. Perhaps I’m mistaken?

 

[lollipop]

There is a tax liability. If one dies then the other person has to pay tax on the deceased 50% share of the property. Someone will correct me if I'm wrong but I believe they have now bought non residents in line with residents and although it varies all the time at the moment I think it is 1%.

 

[Disorderly]

Thanks Lillipop. That sounds reassuringly and unexpectedly painless. Another box ticked and something else not to worry about.

Your response much appreciated.

Duncan

 

[Deanscroft]

Not quite.
The tax liability depends on the relationship. The closest (son or daughter) pays the least, second is the wife/husband, then it increases the more distant the relationship.

 

[Rockape]

Gosh....hadn't given this a moments thought! Better get it sorted ourselves!

 

[car77]

Disorderly - I've sent you a PM

 

[Ger]

Lawyer

Hello, i recommend you to contact Alfonso Benavides in Pollensa. He´s a lawyer and specialist in tax advising. Thy speak good english!

 

[Disorderly]

Thanks Ger.

 

[graham]

Really hate to raise this, but does anyone know how Brexit will affect Inheritance Tax for non -residents in Mallorca? I fear the worst.

 

[Deanscroft]

Nobody knows.