What is the latest inheritance tax law in Spain?
A client of Spanish Solutions, Maria sent us the following request and we thought it was worth publishing it here.
What is my inheritance tax liability on a villa in Malaga?
Hello, Rafa. I’m Maria a long term client of Comaskey properties and Spanish solutions since 2005. We are interested in buying in Andalucia due to the easier inheritance tax laws. We are selling our property in La Zenia. Eva has given me a very fair price for conveyancing, and all the related services. Adam Cook is the estate agent selling the property. She told me that you are a tax professional, one of the very few in the area.
We hope to buy a property in Andalucia for around 500,000 euros in order to make sure my daughters do not pay inheritance when my husband and I pass away. Can you please confirm we can pass the property to our two daughters with zero tax liability? Did they change the inheritance tax law here in Valencia already? We hear it is changing. Would we be better off in your opinion, buying something, adding our daughters’ names to the deeds now and keeping the Usufruct? Am I right in saying that an usufruct is a lifetime right to live in the house?
Thanks as always for your help.
So far so good. We will help Maria to sell her property in La Zenia and buy a property in Malaga.
We will save her money on both transactions. Now, the important question is:
What inheritance tax will our clients children pay in Spain?
Good morning Maria,
This is Rafa, tax adviser from Spanish Solutions.
Regarding inheritance tax in Andalucia, there is a 99% bonification if you donate your property to your daughters. This means that you have to declare the inheritance (donation in this case) tax and pay only 1%. Just in case you pass away in the future and the property is yours, the inheritance tax is reduced by 1 million the tax base as long as the inheritance is not more than 1 million.
You may be right about the Usufruct however. The best would be to buy the property and later donate the bare ownership which your daughters only pay 1%. So you can live there for your lifetime.
Nevertheless, it is important that you know that the Spanish Government wants to remove all these bonifications. We are waiting for a tax reform where this can change and you have to pay the same in Andalucia, Murcia or Madrid. So it would be good to do it this year or maybe the next one.
Please, let me know if you have any questions,
So there you have it. Currently, the Andalucia tax laws are very favourable for this sort of transaction. Listening to Rafa’s advice, however, maybe you should act quickly on it.
You’ll find out more about Rafa here;
If you need any help or advice not just on inheritance tax but any aspect of tax in Spain, please feel free to reach out to us anytime. We love to help people.