[Helen]

My mother and I are English residents in the UK. We jointly own a property in Spain and I have a mortgage on the property. We have had the property for 11 years and both have made Spanish wills regarding the property. We would like to know if the property in Spain is included as part of our assets in the UK or is it treated as a completely separate entity?’

[Mark Stücklin]

Hi Helen,

Are you referring to how the British tax authorities classify your Spanish property? If so, a share of a property in Spain is considered part of your (worldwide) assets for IHT purposes, if that is what you were wondering.

[Mark Roach – Spanish Tax Consultant & UK Limited Company Director]

Dear Helen,

The fundamental difference is that in Spain the Beneficiary who inherits pays the Spanish Inheritance Tax and will receive the Spanish Tax demand, whereas in the UK the worldwide Estate receives the Tax demand from UK Tax office meaning there is no treaty on Inheritance Tax as they are Taxed to two completely separate entities.

The Beneficiaries in Spain only have 6 months to pay the Tax and unlike UK assets Spanish assets are unable to be sold first to pay the Tax.

If the worldwide assets of the UK Deceased are more then the combined £650,000 for a Husband and Wife after both of them passing then their future  Beneficiaries have Inheritance Tax in the UK of 40% and also Tax back in Spain as well.

[Author]

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