iht

[sick and tired]

one for the really clever people what would the inheritance tax be on a property valued at 120k euro as per the paperwork owned by man and wife equally, non residents if they both died together what would the children (3 off) actually have to pay to inherit the property and if possible how that is worked out.

[gruff]

At that figure would there be any tax to pay?

[El Cid]

It's not a normal scenario. A husband and wife cannot die together very easily - one would almost certainly die first even by a minute or two.

The half belonging to the first to die would pass to the other spouse and then to the children when he/she dies. That would raise all sorts of problems as there would be quite a lot of tax to pay on the first half share.

The children would then inherit a third of the total each.

Looking at that case each would get €40k. They would get an allowance of €16k each leaving tax to be paid on the balance ie. €24k. The tax on that is about €2000.

A better solution is to both make a will leaving your share to the children equally and with the provision that the remaining spouse can still have the rights to live in the house. That way they would each inherit €20k when the first parent dies and the same again when the survivor dies. That was there will be two separate tax bills but you get the €16k allowance on both inheritance so you only pay tax on €4k each time which would be a total of about €300 each and the same on the second death.

These are the state rules which apply in all of Spain, however some regions have more favourable rules but these usually only apply to residents of that region.


Sid

[Lavanda]

What a brilliantly clear response! Most financial things baffle me but I followed that outline with ease!

[GRANVILLE]

You quoted non resident. does it change if you are residents?

[El Cid]

You quoted non resident. does it change if you are residents?

Yes it does.

If you leave your home to a spouse, child or parent then you get immediate relief of 95% of the value so long as it was your home for the last three years and the inheritors keep the property (they don't have to live in it) for 10 years. There is a limit of €122K for this allowance for each inheritor and extra tax will be due if the inheritance exceeds this figure.

Clearly if you are not resident then by definition the property cannot be classed as your habitual residence.

In addition each Autonomous Region is allowed to give additional allowances over and above the State rules. For example in Andalucia inheritances of up to €175k are totally free of tax. If they exceed that figure the allowance is reduced to zero and only the State rules apply. Also the existing wealth of the recipient must be lower than €400k.

The allowances only apply where the deceased was a resident of the region for 5 years.

The fact that these regional rules only apply to residents has been challenged in the EU courts and it is likely that they will, in future, apply to non residents but the allowance for the habitual residence will not change as it is impossible for a non resident to claim that it is their home. It is classed as a second property the same as a holiday home which tax residents would not get the relief on either.

The rules keep changing, for better and for worse. Murcia had one of the most generous set of IHT rules but they have very recently withdrawn them.

I will write a FAQ on the subject in due course but it is very complicated.

Sid

[katy]

States here that Andalucía has one of the most punitive IHT systems.

http://www.surinenglish.com/20130725/ne ... 51612.html

[El Cid]

States here that Andalucía has one of the most punitive IHT systems.

http://www.surinenglish.com/20130725/ne ... 51612.html

That is a totally misleading article.

There are many regions in Spain that offer residents absolutely no extra allowances - in fact the vast majority do not. Andalucia at least offers some.

So say it has the most punitive regime is totally inaccurate. It is better to say that it has one of the least attractive special regimes compared to other regions that do offer special allowances.

Sid

[katy]

Well dress the wording how you want but as someone who with 5 others inherited a property from an Aunt there I shall stick with punitive

[El Cid]

All IHT is punitive but some regions are more punitive than the rest and that doesn't include Andalucia.

Sid

[CapnBilly]

My Spanish will (and my English will) is written to say that if my wife does not survive me by 30 days, then it goes to the children instead. I must admit I thought this was pretty standard clause in UK wills, so I wasn't surprised when I saw it my spanish will as well.

[sick and tired]

thanks for the reply we did a will just after buying but we left it to each other and then the kids from what you said it may be beneficial to do a new one. i asked the question as we travel a lot not just to Spain and i was thinking of the scenario of the plane going down a bit morbid i know but its just one of those things that occasionally runs through your mind

[Lavanda]

It used to be calculated that the older spouse died first in the event of a double tragedy as in dying in a plane crash where no one could possibly know who died first.

[Chunky Monky]

It used to be calculated that the older spouse died first in the event of a double tragedy as in dying in a plane crash where no one could possibly know who died first.

I was told that years ago when making a will, is it different now?

[chrissiehope]

I'd always thought that it was the woman who was considered to have died first, being the weaker sex & all that...