Paying Tax on value of Property on death

[Julie]

Thanks Cid, not as bad as I thought then

[Miro]

That applies when you are claiming the 99.9% exemption and planning to stay in the house. The beneficiary must have lived in the house for 2 years.

The €125k exemption applies to any bequest, not just limited to the house. That's in paragraph 2 of the relevant section of the law that you are looking at.

....and if you are not planning on staying in the house, but wish to sell it? Surely, once IHT has been calculated and paid if due, and the house becomes yours, you're free to do whatever you like?

And does the 99.9% exemption still apply on the property, even if you don't qualify for the €125k exemption on other assets (for example, because you were not married to your partner)? I'm trying to figure out if it's worthwhile getting married or registering a civil partnership. As long as the property can pass to the other without a hefty tax bill, the rest isn't really a problem.

[El Cid]

The 99.9% only applies to spouses or civil partners living in the "habitual residence". The tax is calculated at the time of death and only 0.1% has to be paid. The balance is kept on record and if you sell the house within 10 years the remaining amount has to be paid.

The special Andalucian allowance of €125k is also taken into account when they work out the tax so in many cases there will be no tax to have the 99.9% applied to.

It should be clear from this that you are obviously going to potentially save yourself a load of money by forming a civil partnership. It may also be beneficial for income tax purposes.

Beware of moving outside Andalucia because not all regions allow the IHT allowances to civil partners.

Sid

[Miro]

Thanks Sid, all clear now. Better make an honest woman of her, eh?

[Miro]

Just as a point of interest, using the link that Sid provided earlier in this thread to calculate the value of a property for tax purposes - in my case, the market value of our property, a couple of years ago, for example, would have been something like €250,000. But using the valor catastral and the calculator, it's "value" comes out at around €60,000!
I suppose this goes a long way to explaining the Spaniard's love of property as a means for passing the family's wealth on through the generations? By putting large amounts of your capital into property, you could surely reduce your inheritance tax liabilities considerably?