Spain Explained

Inheritance tax in Spain – advice for inheritors

The news that you are due to inherit a property in Spain may be a surprise or you might have known for a while. What you may be unaware of, however, is how to proceed to ensure that you really are the legal owner and how to pay the mandatory taxes. This article provides a step-by-step guide to the process and how to pay inheritance tax in Spain.

We are sorry to hear that you may have recently lost a close member of the family or a friend. Whether this is a sudden bereavement or one that was expected, it is difficult to handle emotionally. We understand. Alongside the grief, of course, is the need to ensure that matters are managed correctly and that legal requirements, such as inheritance tax in Spain, are met.

Step 1 – seek advice

With most matters involving Spanish bureaucracy and legalities, we advise that you speak to a professional. Every case is different and getting it wrong can cause long term problems and lead to frustration. The advice of friends and local ‘experts’ can at best be vague and in many cases misleading.

If the deceased was a client of Ábaco they may have completed an inheritance planning pack. If this is the case then all the details of how you should proceed will be included in this. However, if not, our inheritance department will be able to give you the advice you need including how much tax there is to pay.

Step 2 – change names on the Title Deed

Once all necessary documents about the death and deceased’s assets are obtained then the property can be transferred from the deceased’s name to yours. This requires you, or a representative if you have taken out a power of attorney, to sign in front of the Notary. The Notary is a professional within the Spanish law system who certifies Spanish documents.

Step 3 – pay inheritance tax

Before any transfer of property is made at the Land Registry, you must declare inheritance tax in Spain. The exact amount payable depends upon your relationship to the deceased and also where the property is located. Different autonomous communities have different levels of allowance.

There are four groups of inheritors:

  • Children and grandchildren under the age of 21
  • Children and grandchildren over the age of 21, parents, grandparents and spouse
  • Brothers, sisters, uncles, aunts, cousins, parents-in-law, daughter/ son-in-law
  • Anyone else

In Valencia, for example, there is an allowance of 100,000€ for close relatives. This can mean that as an inheritor you might have nothing to pay, especially if the inheritance is shared between more than one person.

It is important to be aware that if you do not make the tax declaration within six months of death you can become liable for a penalty fee and late payment interest on the tax. The additional amount that you need to pay will depend upon the length of time that payment has been delayed. Every three months you will be charged 5% more up to a total additional payment of 20% if the payment is delayed by a year. This extra, unnecessary charge is something you definitely want to avoid.  

You will need to pay inheritance tax on the value of the share of the property you inherit along with any money that is held in bank accounts, vehicles, deposits or other assets that are left to you.

Step 4 – register with the Land Registry

After correctly entering the new owners of the property on the Title Deed and declaring inheritance tax the change of owners must then be registered at the Land Registry (registro de la propiedad). From here you can also obtain a ‘Nota Simple’ which is confirmation that you own the property.

Step 5 – decide what to do with your inheritance

So, now. The names on the Title Deed and at the Land Registry are correct and the inheritance tax is declared – it’s time for you to make a decision about what you want to do with the property. You might want to keep it, to spend time in Spain on holiday or even to move there eventually yourself. Many families choose to continue the tradition and use the property as a base for family holidays as the grandchildren grow.

Renting out the property is another option. If you do decide to do this remember that you will need to pay Spanish rental tax on the income. If you do keep the property there will be other actions that you will need to take. For example, changing the names on the contracts for utilities and arranging to pay any community fees that are owed.

If, however, you decide to sell the property you can now do it and know that there will be no hold ups due to inconsistencies in ownership or failure to pay inheritance tax in Spain. Either way, you can make the decision to enjoy the property or the proceeds in the way that your loved one would have liked.

For any assistance in the inheritance process and/or payment of any inheritance tax in Spain do not hesitate to contact us at legaldpt@abacoadvisers.com

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2 comments

Caroline Haigh

31 March, 2021 5:30 pm

My partner and I jointly own a property in Spain. It is valued about €200.000. I believe if and when he dies he has left his half to me. Does that mean I would pay inheritance tax on half the value of house. If the limit is €100.000 then would I have to pay anything at all. My half is left jointly between my two sons. So if my partner outlived me my son’s would inherit 25% each of the house.
I do not think they would be interested in the property. Therefore would it be sensible for me to hand my half over to my partner so my name would not be on deeds. I would continue to use it but not own it. Would he have to give me any money for it and what would be cost involved in just giving it to him.
I would be grateful for your comments

Oscar Paoli

6 April, 2021 10:44 am

Hi Caroline,

When a close family member dies there is no automatic transfer of the property or other assets. It doesn’t matter what your relationship to the deceased was or if you are already on the Title Deed as co-owner, the inheritance process must be formally set in motion. This applies even where it is the transfer of property to a spouse, partner or joint owner in Spain. An inheritance deed has to be signed before the notary and this must then be registered in the Land Registry.
The amount of inheritance tax to pay varies depending upon the relationship of the deceased to the remaining owner and in which autonomous community the property is located. If you are married then allowances for close relatives can be applied, eg. in Valencia there is an allowance of 100,000€ between spouses. In some autonomous communities an unmarried partner might come into the ‘anyone else’ category even if you have been living together for many years. Therefore, this can have financial implications that you need to be aware of.

In order to transfer your share to a joint owner in life time, it would be necessary going through an extinction of co-ownership. This type of transfer applies in case of jointly owned property, out of which one of the co-owners takes over the participations of the rest against economic compensation. So should you have a participation in a Spanish property eg with a co-owner, and have come to the agreement, to “sell” your share to the one who will take over 100%, you can benefit as well from the tax advantages of “extintion of co-ownership”. It isn’t just a case of taking out the ‘tippex’. What can seem like a very straightforward subtraction or addition to the lay person is actually a transfer procedure for the legal department. All changes to ownership need to be legalised by a Notary and recorded in the Land Registry.

Should you have any further queries please do not hesitate to contact us.

With kind regards,

Ábaco Advisers