Spanish inheritance tax is exaggerated in bars, on the streets, and by a small few who have a vested interest in getting money our of people by suggested complicated equity release schemes.
Unfortunately, we have one such case where a couple were persuaded to take out an equity release mortgage on their property as a measure to avoid inheritance tax for their children.
The money from the mortgage was placed in complex investment funds and the company has drawn huge administration fees, resulting in the fact that after several years the money has almost all gone, and the couple were conned. We are currently taking this case through the Courts, as well as an awful lot of other people taken in by this company who invested the client’s money offshore. Unfortunately, the company concerned is wealthy enough to be able to fight this to the end, resulting in perhaps a prolonged year battle for our clients to save their house.
These inventive solutions by companies or professional (it appears at the time) individuals often seem to involve high initial fees as set up costs as well as the high annual administration fees that deplete people´s money.
If you decide to put a property in a company to try to save tax, bear in mind
If you decide to sell the property later on in life, for whatever reason, some lawyers of the buyers may caution them against it, as they may not like it when a property is being held by this type of company because of the complications. And if a legal entity has been set up, who is in control of it?
Also, it is not the easy tax bypass that people think. The Hacienda has been clamping down on various tax avoidance schemes for years and it is very risky to assume that these solutions may ensure that no inheritance tax is paid as often they are seen through unfortunately and tax still charged.
The key to successfully mitigate Spain’s IHT is to plan ahead prior to the purchase of a property in Spain and really think about the implications of your Will (or not having a Will) if you were to pass away.
Contact Amanda on enquiries@spanishsolutions.net for any help. It is defintitely vital to have a Spanish Will to make the process simpler.