June 18, 2009 at 9:55 am #55068
Has anyone had any experience of transferring title of Spanish property to their children?
A lawyer I have approached has advised me that the kids and I will have to act as “buyers and seller”. The charge for services will be 1% of the price of the house. The kids will have to pay 7% IVA.
Is this realistic?
Any comments/advice will be much appreciated
June 18, 2009 at 10:32 am #92697
I have had the same thoughts as you regarding the succession of my home.
There as been quite a bit written on here about forming a uk ltd company and transfering the title to that, you could then manage the shareholding of the company within the family to reflect ownership, with the children owning the lot when the time comes.
Its something I will definitely look into, apprently costs are less than a transfer and no inheritance tax to pay.
June 18, 2009 at 11:20 am #92698
Many thanks Steve – I will certainly look into this. It looks a more “attractive” option to pursue.
June 21, 2009 at 2:16 pm #92743
Kali spera Oliver 😉
Have just found this while browsing, it may answer some questions for you?
What are the consequences of Spanish Inheritance Tax?
Spanish Inheritance Tax represents a serious financial penalty to Spanish property owners whether resident or non resident.
Not many people are aware of the taxes payable when an owner of a property in Spain passes away.
If you have never been told about the details of inheritance tax in Spain, it’s simply this:
This tax in Spain is different to the inheritance tax in the UK and most of Europe. In the UK it is the property that is taxed.
In Spain it is the person or persons who inherit who pay so it doesn’t really matter what the laws of the country are where you come from.
If your beneficiaries are non resident in Spain prepare them for a hefty bill.
Spanish Inheritance tax, death duties, legal fees – up to 40%…
So you have a will that lets everyone know who inherits your estate but this does not take away the problem of Spanish Inheritance Tax.
So, right now, can you be absolutely sure that those you leave behind will have the money to cover those costs?
Don’t forget it’s not the same as the UK; there you can get a bridging loan to cover the tax because it is the property that is taxed.
No such luck in Spain as it is individuals who inherit so no bridging loan from the banks.
Oh and did anyone tell you that all the bank accounts in the deceased name even joint accounts will be frozen and your beneficiaries will not have access to that money until they have paid their inheritance tax.
Bet no one told you about the legal costs of Probate either.
Just in case you did not know, it’s approx. €5000 and each beneficiary will have to pay before they have access to any bank accounts or be able to sell the property.
How long do your beneficiaries have to pay?
The tax assessed is payable within six months of death.
If you don’t pay up in this period be prepared for additional interest and fees.
This leaves your beneficiaries with two choices pay up or advise the Spanish government that they do not want the inheritance and they can have your estate.
If you don’t want the Spanish Government to have all your hard earned cash how do you go about safeguarding your heirs from Spanish Inheritance Tax.
There is a simple legal way, transfer the property into a UK company.
Is it legal?
Yes it is, up until now, there have been very few legal strategies to side step Spanish Inheritance taxes.
Wincham Consultants have introduced a simple way to structure the ownership of your property and keep your money out of the tax mans pocket
Under EU law a Company from an EU country can own a property in another EU country and decide which jurisdiction it wishes to be taxed, this can be the jurisdiction of the property or where the Company is registered. The Company only needs a CIF number in Spain.
This is not the same as having an offshore company, as in Jersey, Gibraltar, Isle of Man, etc,
Offshore companies are charged an annual Tax of 3% of the value of the property; the good news is this tax does not affect companies in the EU such as the UK.
By owning a property in Spain via a UK Limited Company you have no requirement for Lawyers in Spain anymore as it is all dealt with back in the UK, no probate, no freezing of bank accounts in Spain and no being forced to sell.
You maintain full control at all times.
You can rent the property, sell it, raise funds on it, just the same as you can right now.
Your new structure is guaranteed safe and effective in removing a potential Spanish inheritance tax bill of 40% – 80% of your asset value.
June 21, 2009 at 2:39 pm #92744
Hi Charlie, this was a similar thread
Also, putting the house in the names of children is not without problems, if they are married and get divorced the partner may be able to make a claim. I think a family trust fund is the best (at time of purchase)
Beware of anyone offering financial solutions 😉
June 21, 2009 at 4:51 pm #92745
Epharisto Charlie and thanks to Katy too.
Looks like I had better “bite the bullet” sooner rather than later. 🙄
June 21, 2009 at 7:56 pm #92746
I wish now that I had done something at the time of purchase but at the time all I could think of was getting everything else in the process 100% right as possible.
The forum ‘Property Questions & Answers’ is closed to new topics and replies.