Confused over Inheritance Tax

This topic contains 2 replies, has 2 voices, and was last updated by  Anonymous 12 years, 1 month ago.

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  • #52353

    Anonymous
    Participant

    Hi all,

    Sorry, but this is a bit of a depressing query.

    My wife and I are looking at buying a villa in joint names in the Marbella area with the intention of becoming residents.

    However, I’ve read that there is no exemption from Spanish Inheritance Tax between spouses and that the surviving spouse is fully liable on the worldwide assets. The allowances seem pitiful before the taxes kick in. The only solution seems to be the creation of a usufruct – or life interest – which seems infexible and fraught with potential problems.

    Just wondered if I’m missing something! đŸ˜• I don’t want the surviving spouse to face paying tens of thousands of euros just to keep the house.

    I don’t suppose there are any plans to abolish IT between spouses like they did recently in Portugal?

    Thanks for any clarification.
    Snowy

  • #66720

    Anonymous
    Participant

    That is a very common misconception with UK owners. The spanish system requires the surviving party to pay Inheritance Tax unlike in the UK.

    The IT has been abolished in many parts of Spain already (Navarre, Basque country and Madrid -almost-.).

    Your wife would only be liable for your worlwide assets if you are a fiscal resident in Spain (=you live here more than 183 days a year).

    What problems does a usufruct have ? Normally you leave the property (nuda propiedad) to your children and the usufruct to the surviving spouse/husband. It’s very straightforward and good.

    In this website there is a -very basic- section on Inheritance Tax.

    Plus if you are resident in Spain you have further allowances. Your wife would be in Group I. And AndalucĂ­a has also its own interesting allowances in some cases of up to 99.99 % albeit subject to some draconian restrictions.

  • #66723

    Anonymous
    Participant

    Drakan,
    Thanks for your swift response. Those “draconian restrictions” you refer to are draconian – they exclude me!! I’ll have to look at the Basque country instead đŸ˜›

    Thanks again

    Snowy

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