# Inheriting property



## emlyn (Oct 26, 2012)

What is the process in Spain for adding adult children's names to a property as a means of providing a smooth transition of ownership following death of parents,this obviously being done prior to deaths.
Is it similar to the UK where it's simply a matter of all parties going to a solicitor to sign for the extra names to be added?


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## extranjero (Nov 16, 2012)

emlyn said:


> What is the process in Spain for adding adult children's names to a property as a means of providing a smooth transition of ownership following death of parents,this obviously being done prior to deaths.
> Is it similar to the UK where it's simply a matter of all parties going to a solicitor to sign for the extra names to be added?


Nothing in Spain is simple!


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## emlyn (Oct 26, 2012)

Thank you,but do you know what the process is?


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## jojo (Sep 20, 2007)

emlyn said:


> Thank you,but do you know what the process is?


You need to speak to an abogado/solicitor. I dont know the process, but as already said, it will be complicated, costly and not like the UK. 

Meanwhile, I'm sure someone will be along to offer some idea

Jo xxx


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## emlyn (Oct 26, 2012)

jojo said:


> You need to speak to an abogado/solicitor. I dont know the process, but as already said, it will be complicated, costly and not like the UK. Meanwhile, I'm sure someone will be along to offer some idea Jo xxx


Thanks, hopefully someone will know.


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## snikpoh (Nov 19, 2007)

The process is actually quite simple but you may not like the answer.

You are, in effect, gifting your children some of your property.

For example, if you own 50% and your wife 50% and you simply want to add your son and daughter to the deeds, then you need to reduce each percentage to 25%- or whatever percentage.

This is easily done with an assesor and Notary but you will incur gift tax as you are giving someone else some of your estate.


Depending where you live etc. etc. it might be better to put the entire property in their names now and just create an agreement (usufruct) to allow you to live in it.


... any more questions, just ask.


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## extranjero (Nov 16, 2012)

This usufruct arrange is fine for Grandad on his last legs, but I can see problems
What if the children want to sell the house
What if GrandAd wants to live somewhere else or do his own thing - he might have 30 or so years left, and needs the money he would have if he sold
it himself.


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## snikpoh (Nov 19, 2007)

extranjero said:


> This usufruct arrange is fine for Grandad on his last legs, but I can see problems
> What if the children want to sell the house
> What if GrandAd wants to live somewhere else or do his own thing - he might have 30 or so years left, and needs the money he would have if he sold
> it himself.


I quite agree, it's not something anyone should enter into without the correct advice and without a LOT of thought!


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## Alcalaina (Aug 6, 2010)

emlyn said:


> What is the process in Spain for adding adult children's names to a property as a means of providing a smooth transition of ownership following death of parents,this obviously being done prior to deaths.
> Is it similar to the UK where it's simply a matter of all parties going to a solicitor to sign for the extra names to be added?


I'm confused, Why wouldn't you just do this via a will? It's very simple to just name them as heirs.


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## larryzx (Jul 2, 2014)

Alcalaina said:


> I'm confused, Why wouldn't you just do this via a will? It's very simple to just name them as heirs.


Heirs, depending on their relationship to the deceased and whether they are tax resident in Spain or not, each have a tax free allowance. After that tax must be paid before the property can be transferred or sold.

I understand that with a usufruct the person entitled also must pay inheritance tax on the benefit they are getting, which is based on their age minus (I believe) 79.


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## larryzx (Jul 2, 2014)

Maybe the best way to avoid IHT, if the property owner is tax resident, over 65 and has lived in the property as their principle home for at last 3 years, is to sell it. They would then be entitled to take all the proceeds tax free. If they then move the money out of Spain, I understand from a gestor, that only assets in Spain are subject to IHT. Thus no IHT to pay when they die.

Of course taking that course would not suit everyone, including me, but I can leave my property tax free to my spouse as the catastral value is under, I believe the max tax free, 200,000 euros. (Andalusia). 

If the poster transfer the property to the grand children, as said earlier, they would have to pay gift tax, probably transfer taxes, notary and the property registry fees, and if in worst case one or both the grandchildren were to die there would be IHT to pay.

I know of someone who transferred his property to his much younger partner paying all the taxes, then the partner suddenly died and he was a landed with all the IHT.


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## snikpoh (Nov 19, 2007)

A Spanish friend of ours (and her two siblings) have just been gifted their fathers house - in equal shares. A usufruct was set up so the father can still live in the property (he must be 80+ years old).

Because the father was 'of an age' there was ZERO tax to pay - so we are told.

This was all done legally with an abogado and through a notary so that the escritura was updated and then registered.


As this seemingly flies in the face of what I've previously been told, ie gift/transfer tax needs to be paid, can anyone shed some light on the matter. It seems to be a great way around IHT in Spain.


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## Madliz (Feb 4, 2011)

> What if the children want to sell the house


The house could not be sold unless all parties were present in the notary's office to sign. Grandad cannot have the house sold from under him if he retains a part share.


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## extranjero (Nov 16, 2012)

larryzx said:


> Maybe the best way to avoid IHT, if the property owner is tax resident, over 65 and has lived in the property as their principle home for at last 3 years, is to sell it. They would then be entitled to take all the proceeds tax free. If they then move the money out of Spain, I understand from a gestor, that only assets in Spain are subject to IHT. Thus no IHT to pay when they die.
> 
> Of course taking that course would not suit everyone, including me, but I can leave my property tax free to my spouse as the catastral value is under, I believe the max tax free, 200,000 euros. (Andalusia).
> 
> ...


If the deceased was tax resident, his wife, also tax resident, she would have to payIHT on all his worldwide assets, according to all the advice from this and other forums, plus advice online..
If the heirs are non resident then only the assets in Spain are subject to IHT.
Isn't that right ?
In Murcia residents have the same allowance as non residents- the measly state allowance of 16. 000 euros.
That is the injustice, making IHT a postcode lottery.
No one could have foreseen this, the previous allowance was generous, like that of Andalucia.


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## larryzx (Jul 2, 2014)

snikpoh said:


> A Spanish friend of ours (and her two siblings) have just been gifted their fathers house - in equal shares. A usufruct was set up so the father can still live in the property (he must be 80+ years old).
> 
> Because the father was 'of an age' there was ZERO tax to pay - so we are told.
> 
> ...



Well as I said a person acquiring a usufruct has to pay tax on the benefit and that is calculated by deducting his/her age at time the deed is made, from 79 (maybe 80). In the example you quoted he was over 80 so no tax for him.

But I agree with you about the gift tax etc.


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## snikpoh (Nov 19, 2007)

larryzx said:


> Well as I said a person acquiring a usufruct has to pay tax on the benefit and that is calculated by deducting his/her age at time the deed is made, from 79 (maybe 80). In the example you quoted he was over 80 so no tax for him.
> 
> But I agree with you about the gift tax etc.


... so why have the children not been charged tax? 

Both the abogado and accountant are adamant that they will NOT have to pay tax on the property (their gift).


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## larryzx (Jul 2, 2014)

extranjero said:


> If the deceased was tax resident, his wife, also tax resident, she would have to payIHT on all his worldwide assets, according to all the advice from this and other forums, plus advice online..
> .


That is what I thought too, when I sought the legal advice. I questioned what I was told but the gestor was adamant.

Although I too am not 100% convinced (I am just 'reporting' what I was told). However, the worldwide tax may only relate to income (which I know it does, although that too varies depending on the Double Taxation Agreement with each country) not to assets held for IHT, as Hacienda could not take any action on say a UK bank account which I left to my son in UK.

Just a thought


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## mrypg9 (Apr 26, 2008)

Gestors are not lawyers. They are not even paralegals.
We had very bad legal advice from a gestor relating to an employment issue at our perrera.
This resulted in a court case ( which we won) but after we employed an abogado who specialised in employment cases.


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## larryzx (Jul 2, 2014)

I am sure most will know, but just for clarity, I do not claim to ave any expertise on the subject. I am just saying what I have been told.

In an attempt to resolve my mind on this I have ben searching on the internet. I copy this just for information, I do not endorse it in any way,

_Administration of Estates with Spanish assetsÂ*|Â*NoVate Direct Legal Solutions 

Inheritance tax is payable in Spain *on the assets there* and must be paid within six months of the date of death to avoid a penalty.

/SNIP/_
I am sure most will know, but just for clarity, I do not claim to ave any expertise on the subject. I am just saying what I have been told.

In an attempt to resolve my mind on this I have been searching on the internet. I copy this just for information, I do not endorse it in any way,

Administration of Estates with Spanish assetsÂ*|Â*NoVate Direct Legal Solutions

Inheritance tax is payable in Spain on the assets there and must be paid within six months of the date of death to avoid a penalty.

/SNIP/

I did find another piece of info which supported the above quote.

I did not find anything which directly said (i.e. not just implied) the contrary. Be interested to know if others find anything.
/SNIP/


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## jimenato (Nov 21, 2009)

Spanish residents have to pay inheritance tax on anything they inherit - wherever it might be. 

So if you are living in Spain and your parents back in England leave you a house and some cash in the UK - you will have to pay Spanish inheritance tax on it. 

If the value of the estate is above the UK IHT-free allowance the estate will be taxed in the UK - then you will be taxed by Spain on what you actually receive.


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## larryzx (Jul 2, 2014)

jimenato said:


> Spanish residents have to pay inheritance tax on anything they inherit - wherever it might be.
> 
> So if you are living in Spain and your parents back in England leave you a house and some cash in the UK - you will have to pay Spanish inheritance tax on it.
> 
> If the value of the estate is above the UK IHT-free allowance the estate will be taxed in the UK - then you will be taxed by Spain on what you actually receive.


The area of query was in relation to a tax resident in Spain leaving, say a UK bank account or even a house, to a person (maybe their grandchildren) who is/are non resident in Spain. I was advised that there would be no IHT liability in those circumstance.


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## jimenato (Nov 21, 2009)

larryzx said:


> The area of query was in relation to a tax resident in Spain leaving, say a UK bank account or even a house, to a person (maybe their grandchildren) who is/are non resident in Spain. I was advised that there would be no IHT liability in those circumstance.


Ah - sorry - misunderstood.


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## mrypg9 (Apr 26, 2008)

larryzx said:


> I am sure most will know, but just for clarity, I do not claim to ave any expertise on the subject. I am just saying what I have been told.
> 
> In an attempt to resolve my mind on this I have ben searching on the internet. I copy this just for information, I do not endorse it in any way,
> 
> ...


Novate Direct is a UK company based in Birmingham, no? Would it not be better to consult a Spanish lawyer, one specialising in property law?
Our UK solicitors have branches in Spain but they are Spanish lawyers with Spanish accreditions who are presumably au fait with any changes or amendments to Spanish laws relating to property and taxation issues.


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## Horlics (Sep 27, 2011)

You are tiresome. Was that supposed to be helpful?



extranjero said:


> Nothing in Spain is simple!


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## extranjero (Nov 16, 2012)

Larynx- what is it about IHT that needs clarifying.
You 've lived in Spain for years, are very savvy about anything Spanish, so I'm wondering what is troubling you about it. Is it about paying IHT on worldwide assets if resident in Spain, because all the advice I've seen comes from the same hymn sheet. If you're resident, I've always understood that the survivor pays IHT on all the deceased's worldwide assets. If I'm barking up the wrong tree, sorry.


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## Horlics (Sep 27, 2011)

I don't like to hijack, but I am on a mission today, a mission against unqualified horse****.

Really Jo?

I didn't know the process for buying a home in Spain until 3 months ago. As it happens, I was simultaneously buying a new property in the UK. The lawyer in Spain got the job done 4 weeks quicker than the one in the UK. He charged me 20% less than the one in the UK. He also did additional services such as making sure insurance commenced on day 1 and that utility bills were transferred to me along with final readings.

I also didn't know the process for buying a car. That went smoothly too. The car was delivered a week after I ordered it. It was registered and taxed etc. and all I did was provide my NIE and the money. Oh, it cost 1,500 Euros less than it would have done in the UK and the road tax was 15 Euros for a year (a new car from the official dealer)

Are there other things that you don't actually know the process of but are sure are complicated and costly? Please warn us. 




jojo said:


> I dont know the process, but as already said, it will be complicated, costly and not like the UK.
> Jo xxx


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## larryzx (Jul 2, 2014)

extranjero said:


> Larynx- what is it about IHT that needs clarifying.


Its a way back now, but I have been trying to make suggestions which might help the person who started this thread.


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## mrypg9 (Apr 26, 2008)

Horlics said:


> I don't like to hijack, but I am on a mission today, a mission against unqualified horse****.
> 
> Really Jo?
> 
> ...


I must say I agree with you on this. We haven't bought property but we've been involved in other things here and if you use your head and take proper qualified advice you are very unlikely to go wrong.
People who moan about Spain should try dealing with bureaucracy in some other countries.

I'm surprised your car was cheaper, though. From what I've seen, cars are more expensive here, second-hand 'quality' cars, anyway. But I've no direct experience so my opinion is worth nothing, really. I bought my Spanish-reg car in the UK ad in spite of what some have said the whole process of getting it registered in my name was simplicity itself. 
Ditto getting our NIE etc, bank account and totally legal rental contract.

There is indeed a tendency to make out things are more complicated than they are as there is a tendency to give advice that may not be well-founded..I have no idea why but a glance through this forum will show it is so.

No-one coming to Spain should be put off by posts that make out that everything here is complex and all officials are unhelpful. 
Some are, of course, as anywhere in the world. It's usually down to rowing with their partner over breakfast.


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## mrypg9 (Apr 26, 2008)

emlyn said:


> What is the process in Spain for adding adult children's names to a property as a means of providing a smooth transition of ownership following death of parents,this obviously being done prior to deaths.
> Is it similar to the UK where it's simply a matter of all parties going to a solicitor to sign for the extra names to be added?


Your best course is to consult an abogado, one qualified to advise in such matters.
We on this Forum can only give opinions and as we are not qualified in this field it's best to hear it from the horse's mouth, so to speak.


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## Horlics (Sep 27, 2011)

That's what I saw too and is the reason I went to a dealer and bought new. I was looking at 4,500 Euros for a 10 year old car and 10,500 for the same make and model brand new. I logged onto ford.es and ford.co.uk and used the options selector to "create" the same car, and the difference was 1,300 Euros with Spain being the cheaper. 

The difference was greater by the time the transaction was complete because a major discount connected with their finance option was given to me even though I wasn't using finance.

I had a friend out last week who bought from Ford in the UK 4 months ago. He didn't want finance but they only let him keep 50% of the discount they were allowing on finance deals.




mrypg9 said:


> From what I've seen, cars are more expensive here, second-hand 'quality' cars, anyway.


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## emlyn (Oct 26, 2012)

mrypg9 said:


> Your best course is to consult an abogado, one qualified to advise in such matters. We on this Forum can only give opinions and as we are not qualified in this field it's best to hear it from the horse's mouth, so to speak.


Thank you to everybody who has responded to my original query,you have given me much food for thought and I shall certainly not rush in to anything.


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## nidelva (Nov 12, 2012)

Just the last thought on inheritance for foreigners in Spain. I have come across Norwegian website (some years before) that mentioned that a person owning a property in Spain can make a will (both in Spain and Norway) that inheritance should follow Norwegian Law. I am not sure if it is the case but if it is then a survived spouse can choose to remain in undivided possession (as it is in Norway). I think that no inheritance tax is paid in this case. Can it be the same for people from UK?


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## Guest (Aug 19, 2014)

It is possible to choose the governing law but that doesn't affect tax liability. As I understand it, all property in Spain attracts IHT on a death. Some regions give considerable tax assistance to alleviate the pain of this while others give none.

My understanding is that discussions are taking place about harmonisation of IHT between residents and non-residents - there are others on the forum who know more about this than I do and can perhaps give an update on the situation.


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## Alcalaina (Aug 6, 2010)

meetloaf said:


> My understanding is that discussions are taking place about harmonisation of IHT between residents and non-residents - there are others on the forum who know more about this than I do and can perhaps give an update on the situation.


That's right, three years ago the EU instructed Spain to harmonise IHT because it was discriminatory against non-resident EU citizens who own property in Spain. 

This document was published recently - I haven't gone through it in detail but it looks like we shouldn't expect any change soon.



> EU moves towards eliminating cross-border IHT problems
> 
> CFE Opinion Statement FC 12-2014 on cross-border inheritance tax problems within the EU
> 
> ...


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## Alcalaina (Aug 6, 2010)

This article gives details of recent changes to IHT (succession tax) in Valencia. 
Changes To Spanish Succession Tax In Valenciana

In Summary:



> Under State rules, the personal tax free allowance for spouses and direct line relatives is just €15,957. In Valencia it has been higher at €40,000. With effect from 7th August 2013, the allowance has increased to €100,000.
> 
> It is not all good news. In 2007 the Valenciana government introduced a 99% reduction in the tax payable on inheritances received by spouses and direct line relatives - provided they are habitually resident in the region. With effect from 7th August, this 99% reduction is lowered to 75%.
> 
> In the case of gifts, this reduction had a limit of €420,000 per estate, with gifts from the previous five years taken into account. This limit is now reduced to €150,000.


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## extranjero (Nov 16, 2012)

Alcalaina said:


> This article gives details of recent changes to IHT (succession tax) in Valencia.
> Changes To Spanish Succession Tax In Valenciana
> 
> In Summary:


The state allowance is the same, whichever region you live in.
It's the regional allowance which varies tremendously from nil to many thousands
How any one can think this postcode IHT allowance is fair is beyond me.


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## larryzx (Jul 2, 2014)

extranjero said:


> The state allowance is the same, whichever region you live in.
> It's the regional allowance which varies tremendously from nil to many thousands
> How any one can think this postcode IHT allowance is fair is beyond me.


Lots of taxes are different from place to place, IBI, Vehicle Circulation tax. Plus Valir, etc, as are property prices, shop, restaurant, bar prices, parking fees, etc., so I guess there is no reason to think IHT should be different (except maybe if one comes from a country where they do things differently) .


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## extranjero (Nov 16, 2012)

larryzx said:


> Lots of taxes are different from place to place, IBI, Vehicle Circulation tax. Plus Valir, etc, as are property prices, shop, restaurant, bar prices, parking fees, etc., so I guess there is no reason to think IHT should be different (except maybe if one comes from a country where they do things differently) .


But the state allowance does not vary from region to region, only the regional allowances


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## Guest (Aug 20, 2014)

This is a topic which I have been mugging up on as it obviously concerns two pensioners about to move to Spain.

It is quite complex and has to be taken region by region. Valencia, our destination, changed the rules so the basic regional allowance was reduced to 75% but the threshold was increased. Crunching the numbers shows that few people will be worse off and many better. However, this only applies to residents. 

There are two issues on the table, cross border and harmonisation between residents and non-residents. I am not concerned with cross border. 

I found what appears to be a reasonable abogado site which says that the gov has accepted the need for harmonisation between residents and non-residents but is not announcing changes yet as it is consulting the autonomous regions. Who knows??? But the EU is all set to fine Spain heavily if they don't move on this some how, some where, so there will be changes but what will they involve?

The judgement has yet to be announced but Germany was in a similar position not very long ago and judgement was made against them. If you can find it, and I don't have the reference to hand, it makes interesting and encouraging reading.

In the meantime, OH is under instructions not to die for at least three years after we obtain residencia.


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## CapnBilly (Jun 7, 2011)

meetloaf said:


> In the meantime, OH is under instructions not to die for at least three years after we obtain residencia.


Better tell them to hang on a bit longer, as the regional allowances for Inheritance tax only apply if you have been habitually resident for 5 years at the time of death.


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## Guest (Aug 21, 2014)

Ah yes. Late night typo. 5 years it is. I shall inform OH he can't check out in the foreseeable future.


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