INHERITANCE tax on homes in the Balearic Islands has been slashed by between 25% and 75%, a move which is likely to encourage buyers who know they will not leave their loved ones with a huge bill to pay when they pass away.
Properties with a catastral, or basic land value for home tax calculation purposes, of €100,00 or less already get a 95% discount on inheritance tax.
Regional government deputy president Julio Martínez says that until now, if the catastral value - which can never be more than 50% of the market value - exceeded €100,000 'by just one euro', the person who inherited the property would end up paying 100% of the inheritance tax rather than only 5%.
Martínez considers this unfair, and has introduced a sliding scale to soften the blow.
Now, homes with a catastral value of between €100,001 and €125,000 will attract a reduction of 75% on inheritance tax payable by those to whom they are left, and those between €125,001 and €150,000 will only pay 50%.
A discount of a quarter of the inheritance tax will now apply to properties with a basic land value of between €150,001 and €200,000, and any with a catastral figure of €200,001 or more will pay the full amount.
Effectively, this means that inherited properties which attract the full rate of tax will not be worth less than €400,000 on the open market.
Typical holiday homes, first- or second-time buyer properties or smaller detached or terraced houses bought by expat retirees who have 'downsized' are mostly likely to qualify for sizeable discounts.
Read more at thinkSPAIN.com