Inherited Spanish Property – What are our options?

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This topic contains 11 replies, has 6 voices, and was last updated by Profile photo of Igurisu Igurisu 4 years, 3 months ago.

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  • #57015
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi everyone,

    My brother and I are just coming to terms with the costs of inheriting an apartment in Cumbre Del Sol. My aunt died this year leaving a Spanish Will that names my brother as beneficiary. We have both enjoyed many holidays at the apartment which was bought in the 80’s and has not been modernised. The tax and fees are far more than we were expecting and we are considering ‘walking away’ metaphorically. There are plenty of empty properties near by and we are wondering at what point the property would revert to whoever deals with that sort of thing in Spain. We only really want to carry on holidaying there and have no plans to sell at any time. Has anyone any experience of not realising an inherited property but continuing to use it? We don’t want to break the law but as I understand it the law can’t force you to receive an inheritance. Any advice or anecdotes would be appreciated.

    Graham

  • #111673
    Profile photo of Anonymous
    Anonymous
    Participant

    Interesting approach to the situation. In cases like yours one is not thankfull to the kind doner.

    You really have to think about the tax laws where it is beneficial to abandon the property than paying the taxes on it, just does not make economic sense.

  • #111676
    Profile photo of Igurisu
    Igurisu
    Participant

    I’m in a similar situation, but not quite the same so I know how you feel. My father is still living but can no longer use his apartment due to ill health. He wants to give it to my brother and myslef but having researched the taxes, both initial gift tax and ongoing property/income/wealth tax its rapidly looking like we will ask him to keep it in his name (I know this is only delaying the inevitable).

    If you really do want to give it away or leave it how about considering a charity gift? I have no idea who, help for heroes, spanish charity, kids charity?

  • #111677
    Profile photo of Chopera
    Chopera
    Participant

    @igurisu wrote:

    I’m in a similar situation, but not quite the same so I know how you feel. My father is still living but can no longer use his apartment due to ill health. He wants to give it to my brother and myslef but having researched the taxes, both initial gift tax and ongoing property/income/wealth tax its rapidly looking like we will ask him to keep it in his name (I know this is only delaying the inevitable).

    If you really do want to give it away or leave it how about considering a charity gift? I have no idea who, help for heroes, spanish charity, kids charity?

    Can you not buy the apartment off your father and get him to gift you the money in some more tax efficient way, maybe away from Spain?

  • #111680
    Profile photo of Igurisu
    Igurisu
    Participant

    We’re looking at all the options we can think of Chopera. If we buy it then he has to pay sales tax. He can gift some money to us, but the gift limit in the UK is £3k per year, above tax is payable. Even then, its only tax free if he lives for a further seven years from the gift or we have to pay inheritance tax in the UK.

    Bad planning, or I should say lack of planning really, but my father had very good health until the last few months when something unexpected has been found.

  • #111683
    Profile photo of Anonymous
    Anonymous
    Participant

    I feel the sales tax of say 8% will be less than other taxes. If this happens to be the case get the valution done by the Hacienda and use that as a sales price for contract /tax purposes.

    If you buy from your father within this year ( of course this is not an arms length trasaction ) than when you sell you will not pay any capital gains tax ( An exemption given until 31/12/12, not sure if this exemption is only for the new built )

  • #111684
    Profile photo of Igurisu
    Igurisu
    Participant

    Thanks Shakeel, I’m going out to the apartment in October, while I’m there I will go visit the Gestor also. Truth is we would like to keep it on if the cost is not too high. The running costs we can handle with no problem, income tax, property tax and wealth tax are also OK. Its just the gift tax that’s a killer. I’m expecting to pay €15,600 split between two of us. Whilst we could do it, it negates the idea of low cost holidays really, I could pay for a lot of apartment rental with my share of the tax.

  • #111685
    Profile photo of Anonymous
    Anonymous
    Participant

    If you are expecting to pay €15600 that equates to roughly 8% IPT tax on a property value worth €200,000.

    The limit of €600K for you & the same for your brother making €1.200K. You need to check out if the limit is given to the property or to a person.

    What ever step you take i.e. buy or have it transfered. It would be good planning to place the names of your wive’s as the buyers in this case if one of you dies there is no need for yet another transfer and yet another set of taxes. ( This topic will make the forum users see as to why some old properties do not have correct titles due to unjust taxation system families have used the premises and never bothered to change titles etc)

    Perhaps add your spouses name on the purchase contract. check this out. If the property in question is below the limit you need not to worry about the wealth tax. However Spain being Spain . Andalucia may have different rules. See the link below.

    http://www.andalucia.com/forums/viewtopic.php?f=41&t=29091

  • #111713
    Profile photo of Arthur Stuttard
    Arthur Stuttard
    Participant

    Hang on for the time being. As a result of my representations to Brussels, Spain has been told to put its house in order in respect of inheritance tax discrimination against non-residents. It has, as yet, failed to comply. When it does, it should work in your favour.
    Personally, I do not stand to benefit from this, and am asking those who eventually do (and some will substantially as it is likely to be retrospective) to make a donation to the Prostate Cancer Charity (http://www.prostate-cancer.org.uk)

  • #111715
    Profile photo of Anonymous
    Anonymous
    Participant

    This post is of interest to me as well. The land my Dad has is for sale, only 3000m with a nave and corrals and he paid 30k for it. Nothing is selling and it just adds to the stress we are already suffering with our mortgage on the flat situ. My husband loves the area and wants to buy it from my Dad, well, from me as it’s actually in my name but i’ve never considered it mine as I didn’t pay for it.

    I am interested in knowing how to change it out of my name and into my husbands for the cheapest fees. We married in the UK so what we own is separately compared to the Spanish system where it is a joint ownership. We’ve been stung so many times that we want all the facts first. I would have thought paying a nominal amount and then going to the notary would be the cheapest way? Take advantage of the crisis prices to basically hand over the property/land or whatever for the lowest fees?

    Yet to find out how my hubbie is planning on paying for it, but if it takes the stress of trying to sell it away then that’s a good thing.

    ps, good idea Arthur about the prostrate cancer charity. My father in law has it and is on medication. He actually has a hospital test today to see what the situ. is.

  • #111733
    Profile photo of Anonymous
    Anonymous
    Participant

    @itsme, sorry to hear about your father in law. If it is in your name than that is a fact. How you feel or not is irrelevent.

    Please check out husband & wife transfer & how would this affect you.

  • #111734
    Profile photo of Igurisu
    Igurisu
    Participant

    Itsme, from my own research I believe there would be sales tax(if sold) or gift tax(if transferred) to pay between husband and wife. Probably better to get some good legal advice.

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