A question re. our house?

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28 Apr 2012 18:20 by Pilgrim Star rating in Costa Calida. 223 posts Send private message

Pilgrim´s avatar

We have a paid for house in both mine and my wife´s name.

Our only Will is in Spain, which states that all assets of the deceased pass to the survivor.

In the event of one of us passing, can the survivor sell the property for something smaller if necessary, or does this 10 year thing come into operation?

Thanks for any help or advice anyone can give.



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pilgrim




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29 Apr 2012 11:33 by semijubilada Star rating in London/Torrevieja. 1073 posts Send private message

I've heard of a 5 year unofficial rule for registering a death.  My neighbour was advised to wait 5 years and last year her husbands death was declared, she received a bill for 7k which was later reduced to 300.  I think this only applies to people who are resident here.

Obviously the amount you pay depends on the value of the assets the deceased leaves, in this case the house.  You can see that it's definately worthwhile if you are able to wait for 5 years.

If not then as you only own 1/2 the house you have to pay tax on other half you have inherited if you want to sell. 

The other thing to be aware of is that if you have a joint account, open up an account in the remaining partners name.  Leave enough money in the joint account to pay 6 months of bills and transfer the rest to the new account.  Later the direct debits can be transferred to new account and any money in the original account can be left frozen until the death is fully registered.

If you tell the bank before this the account will be frozen and no bills can be paid.





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29 Apr 2012 12:30 by johnzx Star rating in Spain. 3125 posts Send private message

This is as I believe it to be.  Of course if you are legally qualified, please correct any errors,
 
The five years relates to the fact that in Spain (at present there is a proposal to change it) if you do not get a tax demand within 4 clear years, you do not have to pay. Some say, do not register a death for that period and you can thereby evade tax.  If you get caught there are penalties.  I do not think it is a reasonable idea.
 
The inheritance laws in Spain varying with each Region, therefore, one cannot give a clear-cut answer. That said, there is a rule which says that if a RESIDENT spouse inherits then providing they keep the property for 10 years there is no tax to pay.
 
Also, remember that in Spain the tax is on the person who inherits not on the estate, as I UK. The relationship to the deceased has a big part to play, as does the  wealth of the person inheriting.    As I said no simple answers.
 
A person cannot sell an asset (a house) before they pay the tax.
 
The advice about joint bank accounts is sensible, but I would move it to another bank, just to be sure. However, I believe that it is at least technically unlawful to do it.  Unless the UK law has changed, the same advice applies there.



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29 Apr 2012 13:46 by norm de plume Star rating in North Tenerife and L.... 145 posts Send private message

Spain has been told by Brussels to amend its inheritance tax rules to the extent that they discriminate between residents and non-residents.  As yet, nothing appears to have been done.





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29 Apr 2012 14:02 by semijubilada Star rating in London/Torrevieja. 1073 posts Send private message

I'm not legally qualified, a lot of my information I get of of forums like this.  Most I take with a pinch of salt but what I stated earlier is true as I got it first rather than third hand.

Sometimes us Brits or foreigners follow the rules too rigidly and perhaps we should heed the advice given by someone who is Spanish.  That's what my neighbour did and the amount she paid in the end speaks for itself.

Also it would depend on whose name the utility bills are in as to whether it would be easier to open up a new account with another bank.  It may be simpler to stay with the same bank for the time being.

When my father-in-law died in UK we had to apply for probate and the account was frozen until that was granted.  No direct debits were paid, only the funeral expenses could be paid from account.  If it had been a joint account with one of his children the account would have remained opened and we wouldn't have had to apply for probate.

He owned property but when my mother-in-law died his solicitor suggested invoking her will and a Dead of Variation added their children to the deeds.  The solicitor said that way if he had to go into a nursing home then he wouldn't have to sell the house to pay for the fees.  What we didn't realise was that it also gave them selling rights as they were the majority owners and we only needed to have the probate for the bank accounts.  If we'd realised this before we could have saved ourselves a lot of trouble, the probate although simple took the solicitor 6 months to do and it cost over 6k.

When my brother-in-law died I helped my sister with the probate form, the house deeds were in his name plus the majority of his money was in a sole bank account.  It was quite simple to complete as she inherited everything and it was dealt with very quickly.  She paid a nominal sum to the Land Registry for the deeds to be transferred into her name.

If only Spain were as simple!





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29 Apr 2012 14:37 by Julianx Star rating in Spain. 61 posts Send private message

 

Jubilado
                            " Sometimes us Brits or foreigners follow the rules too rigidly and perhaps we should
                              heed the advice given by someone  who is Spanish.  That's what my neighbour did
                              and the amount she paid in the end speaks for itself."
 
 
That ‘advice’ is how to evade tax, not avoid it, and it is totally illegal. Tax fraud is punishable with imprisonment.
 
As for ‘doing what they do’ A lot of people, including Spaniards are now finding that after evading tax for many years the  pigeons are coming home to roost and they are getting caught.
 
 
A lot of foreign property buyers took similar advice i.e ‘That’s the way we do it’ and they now risk loosing their properties.
 
As I said, breaking the law is never GOOD advise.
 
 
PS     RE moving to anther bank. The reason I said that was that the same bank could more easily also freeze the new / illegally opend account than a new bank.

 

PPS  Interesting news about your experience of what happens in UK,   but not really relevant to the question posted here which was about Spain.

 


This message was last edited by Julianx on 29/04/2012.



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01 May 2012 15:48 by semijubilada Star rating in London/Torrevieja. 1073 posts Send private message

Julianx - are you also signing on as Johnzx?  Your reply seems to imply that by the PS talking about his earlier reply.

Johnzx seemed to be asking about how this sort of thing is handled in UK so that's why I replied as I did.

I'm perfectly aware that it is considered unlawful.  If you follow the law then you stand the chance of being left with no money even though some of the joint account monies belongs to you and a huge tax bill with no method of paying it or any utilities bill.  It's a catch 22 situation.

I can't understand why no-one has lobied for this law to be suspended between husband and wife.  The tax that was originally paid when the house was purchased was paid with joint funds.  One dies and you have to pay another tax to get back something you already own.  

 





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05 May 2012 10:40 by midasgold Star rating in Mijas.. 88 posts Send private message

Hi ,

To get  the full tax advantage (if any) it is important that both husband and wife are a Spanish resident.

ALSO from a practical point of view DELAY any information to the bank about any joint account until  other arrangements

are in place !!

A friend  lost her husband ,sought advice at the their bank , which then closed the account and left her without

any income for six months. Very helpfull !!!



_______________________
If lucky, there is another day.



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05 May 2012 16:15 by mariadecastro Star rating in Algeciras (Cadiz). 7925 posts Send private message

mariadecastro´s avatar

 Pilgrim: At present, the 10 year stay obligation of the heir, to be bennefitted by the tax reduction is applicable and I cannot see this changing after Spain adapting IHT legislation to European requirements as the 10 year stay is also on nationals, so, there is no discrimination there. 



_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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06 May 2012 09:10 by laurdan Star rating. 444 posts Send private message

How does this work if you are a non-resident?



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06 May 2012 12:23 by midasgold Star rating in Mijas.. 88 posts Send private message

As a non resident AND non related the posible tax charge could be as high

as 80% repeat yes eighty !!!!!



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If lucky, there is another day.



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06 May 2012 18:53 by laurdan Star rating. 444 posts Send private message

So, if say you and your spouse own a property i joint names worth, let's say €100,000. One of you dies, the remaining spouse has to pay 80% of €50,000 which if my maths is correct would be a tax bill of €40,000 to pay before you can sell the property???



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06 May 2012 19:59 by midasgold Star rating in Mijas.. 88 posts Send private message

There are allowable deductions ( including any mortgage ) but YES  40,000  is not an unlightly figure. 



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06 May 2012 20:19 by laurdan Star rating. 444 posts Send private message

What happens if you don't sell?



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06 May 2012 20:59 by midasgold Star rating in Mijas.. 88 posts Send private message

The benificary is the guy who pays any tax.

This must be paid before any recipt from the estate.

 Could be a BIG problem  !!!   



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If lucky, there is another day.



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06 May 2012 21:06 by laurdan Star rating. 444 posts Send private message

I think you may have it wrong.....

Please read this link


http://belegal.com/blog-by-antonio-flores/spanish-inheritance-tax-a-cynical-approach/




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06 May 2012 21:45 by midasgold Star rating in Mijas.. 88 posts Send private message

Sr Flores is a well respected lawyer and I go 100% with his advice. However,and having read his blogs I see no conflict

with what I previously said.  What are your thaughts on this ?



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If lucky, there is another day.



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06 May 2012 21:57 by laurdan Star rating. 444 posts Send private message

I'm hoping I'll die first and then my husband can sort it out. But hopefully not for another 20 years



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06 May 2012 22:02 by midasgold Star rating in Mijas.. 88 posts Send private message

Mrs Laurden I wish you a long and happy life . I am away now for my glass of

Rioja  -- Bye.



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If lucky, there is another day.



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12 May 2012 15:18 by normansands Star rating in Kent. 1341 posts Send private message

Perhaps sell whilst both alive.......

Buy to let in UK.....

get ever increasing rents and and value.........to pay reducing rent in Spain

no inheritance between joint owners....

let children worry about inheritance tax...

perhaps even buy in their names.....etc.

perhaps even this is due diligence????????

Regards

Norman



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N. Sands



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