Considering a property on the Costa del Sol? Understand Inheritance Tax.
Whether you are non-resident and buying a holiday home to visit or rent out, or if you are an expat who lives in Spain as your main residence, we always advise our clients to understand inheritance tax and ensure they speak to a solicitor and obtain a Spanish will. This is in addition to what they may have already in the country they come from. A Spanish will is critical to succession planning as laws in Spain are complex and potentially time consuming and expensive for any heirs.
While in years gone by, inheritance tax was seen as quite prohibitive in Spain, this situation is improving and new laws implemented in Andalucia in August 2016, have ensured that this region has moved further in line with EU legislation and in most cases substantially reduced tax liabilities.
The subject of succession planning is not something that people necessarily want to consider, however, if you would like to protect any potential heirs from the stress and cost of any assets you may have in Spain, particularly, if they do not reside in Spain then it is a very worthwhile endeavour to plan for any eventuality. Your property assets are investments and should be protected. Property in the Costa del Sol can provide massive returns and should be viewed as any investment that you may have anywhere else in the world you reside.
In particular, if you are a resident of the EU, then there are now substantial reductions in inheritance tax for assets inherited in Spain. This is particularly the case, if the property is the main residence of the deceased. In this case, descendants are entitled to 95% tax relief up to any amount, provided that the property ownership remains with them for the next 3 year years. For example, if Mr Smith, owns a €500,000 villa in Atalaya, upon his death, his children, who live in the UK will receive the asset with a 95% tax relief in inheritance tax, provided that they do not sell the villa for another 3 years’ minimum.
Another consideration for non-residents is the understanding of any double taxation requirements, as Spain does not necessarily hold a double taxation treaty with respect to inheritance tax. However, having said that there are often situations where these requirements can be substantially reduced and having advance access to specialist tax advice is well recommended.
How to understand inheritance tax specific to you?
Marbella Homes work with several established law firms in the Marbella area and there are a number to choose from. We believe the key to owning and enjoying property in Marbella is to understand all your obligations and avoid any surprises. It is easy to be proactive and informed and this leaves you free to all the many benefits a holiday home or residence in the beautiful Costa del Sol can offer.
If you are interested in purchasing a property on the Costa del Sol from Marbella to San Pedro de Alcantara, Atalaya and to Estepona, please contact Marbella Homes by calling or emailing [email protected] where we can offer balanced advice, specific to your needs.
Disclaimer: Please note that Marbella Homes does not offer tax advice. The information provided in this article is for guidance only and should be checked with a lawyer or tax advisor.