Spanish Inheritance Tax
December 17th, 2007 - Chris MarshallHopefully this article will answer some of the questions you may have about “Impuesto sobre Sucesiones y Donaciones? (ISD), the Spanish equivalent of inheritance tax.
This is due on “assets and rights, which are located, enforceable, or executable in Spain”. Sounds a little complicated, but for most of us the asset is simple and is our Spanish home. Inheritance tax is then due on the market value of the property minus the ‘basic exemption’ that each owner is allowed, currently around €16,000. ISD is a little more complicated than its UK equivalent as it is a progressive tax, with the percentage paid going up dependent on thresholds in the property value, actually a little like income tax and earnings. This starts at 7.65% for roughly the first €8000 and goes up to 34%. For a property with a ‘tax base’ of €240,000 (after exemptions are deducted), the percentage would be around 25% or €60,000.
The ISD tax assessed is payable within six months of death, and is the liability of the heirs. Unlike in the UK, it cannot be taken from the deceased estate, nor can the property of the estate be sold until the ISD is paid. However, with advice and careful planning, clients utilising Spanish Inheritance Tax Mitigation Scheme (SITMS) can dramatically reduce their potential future ISD liability.
SITMS’s are useful in that ISD is payable on the ‘net asset value’ i.e. LESS deductible charges, debts and expenses, which includes loans and mortgages registered against the property in the Spanish Land Registry, through a Spanish Notary Public. This is great for non-residents who can take out interest only loans against the property, and keep monies raised outside Spain so that they do not need to be declared to the Spanish tax authorities. The only consideration then is ensuring that the money is invested to service the interest on the loan. All sounds pretty neat!
Of course if you are resident in Spain and you leave your primary residence to you children or spouse, you can effectively reduce your inheritance tax bill by 95 % as long as your inheritors don’t sell it for 10 years.
All very interesting.
As a non-retired person, I’m now going to check out if there are any ways to reduce Capital Gains Tax! Watch this space …
About Almerimar
Almerimar is located in the province of Andalucia, Spain. The nearest airport is 30km away in Almeria. Other airports that are within 3 hours include Malaga, Murcia, Granada, and Alicanti. Other holiday resorts in the region include Mojacar , Aguadulce and Roquetas de Mar
Almerimar is a great place to live as an expat amongst the expats, or to work amongst the Spanish. There are all kinds of properties including villas, apartments and town houses for rent or sale. It is a very traditional part of Spain, with traditional Spanish foods so if you plan to travel to Spain either to look for jobs, for your company to trade with companies in Spain, or to learn Spanish and enjoy the Spanish weather then come and take a look.
Almerimar is one of the largest marinas in Spain with over 2,000 births and excellent boatyard facilities. If you are interested in buying or selling a boat please visit our advertisers Yes Yachting or the Boat Company
