Non Residents Inheritance Tax in Anadalucia

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16 Jan 2014 03:55 by custodian1 Star rating. 5 posts Send private message

My Mum owns a flat in Benalmadena. She didn't take to life in Spain and now lives in England with one of my sisters. Meanwhile, for the last 5-6 years, the flat has been rented (is currently vacant in case anyone is interested in cheap rent - 550 per month). There are three children - me and my two sisters who will be beneficiaries of my Mum's estate when she passes on. One sister lives in Spain and has been for the last 7 years or so. One sister lives in England (with Mum) and I live in New Zealand.The flat is said to have a fiscal value of about 165,000 Euros. Mum is getting quite old now and my two sisters and I are thinking about the best way to reduce our tax liability.

A local property manager has suggested the property could be transferred into a Spanish limited company. This would cost approximately €3,800.  Upon mother's death, the shares could be dealt with for inheritance tax purposes and the inheritance tax would be the same. If, however, we did not probate the shares for 4½ years, the liability to pay tax would become statute barred (i.e., no tax). The property would be able to be sold even during this period.

Is this dodgy, or is it a good way to avoid paying inheritance tax. Any thoughts anyone? Anmy advice would be greatly appreciated!!!!



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16 Jan 2014 08:57 by baz1946 Star rating. 2217 posts Send private message

As you must be aware of the Spanish legal system can be vastly different from the UK system and as you will in the end probably be going to a solicitor one way or the other, doesn't it make some sense to get the proper, and correct advise now, as opposed to listening to a local property manager, even though he only said "Could" be transfered into a Spanish limited company.

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16 Jan 2014 09:35 by floella Star rating in SE Spain. 779 posts Send private message

Would it not be easier to put your mums vacant flat up for sale
Even reducing the assumed value ,for a quick sale , the financial outcome will probably be far more than than the beneficiaries will receive even after paying professionals who say this tax " could possibly" be reduced

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16 Jan 2014 15:34 by johnzx Star rating in Spain. 5247 posts Send private message

Floella,  Very good idea, to sell the property, pay the 3%, and do a runner with the rest. 

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16 Jan 2014 21:08 by hughjardon Star rating in Jaywick Sands. 419 posts Send private message

hughjardon´s avatar

Stay away from these schemes total load of bollocks they will rip you of especially Win---- a well written will should negate any issues




This message was last edited by hughjardon on 17/01/2014.

Done the Spain thing Happier in the UK

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17 Jan 2014 14:39 by camposol Star rating in Camposol. 1408 posts Send private message

How will that help ? All the will does is to clarify who you want to leave your assets to.You still have to pay. IHT on all your worldwide assets

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19 Jan 2014 23:44 by custodian1 Star rating. 5 posts Send private message

Thanks all who replied in this thread.

Floella, Johnzx, my sisters and I all originally thought it might be better to hang on to the flat for a few years to see if the value would come up. It is worth substantially less than what Mum originally paid for it 6-7 years ago. I presume this has been due to the adverse economic situation in Spain and Europe as a whole. The question is, has the market hit bottom? I'd hate to sell now only to find the property market in Spain has recovered during 2014. That's always the dilemma isn't it? Maybe better to take the money now and invest in something that will yield a return? I'm new to this forum, and don't live in Spain, so would love to hear your views.

Selling now would definitely ease Mum's worries as the place has been empty for over a year, but does that mean we will probably have to drop the price a lot to get the sale? (If anyone is familiar with the Sensara complex in Benalmadena, its a spacious 2 bedroom apartment with a massive terrace) Oh, what to do, what to do!!!!

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20 Jan 2014 06:20 by floella Star rating in SE Spain. 779 posts Send private message

Even without the luxury of a crystal ball dont think those of us who bought 6/7 years ago when property prices were inflated beyond belief will see our money back for years to come. If ever.
Most would consider themselves fortunate now to get back 50% if they thought they could sell.
As you have discovered renting is difficult enough.

We all hope it has reached "rock bottom" but even so prospective buyers want to broker deals .

Looked up the complex on line and with the facilities on offer would think the community charge quite high.
Regardless of the actual value of the property the hacienda will have their own figure, usually higher, on which to base death duties PLUS the wealth, supposed or otherwise, of the beneficiaries will be included possibly resulting in a huge bill and you still have a property with bills to pay which if I am correct is classified a retirement complex . So will any of you be able to use it?

At the moment a beneficary over 21 is permitted about €16,000 before tax and Spain is so broken that things go down rather than up!!

Factoring everything you know in this equation especially , as you stated ,the drain on your mothers resources personally think it is better to market the property....which may take years to sell the best option.

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20 Jan 2014 09:08 by baz1946 Star rating. 2217 posts Send private message

The question is, has the market hit bottom? I'd hate to sell now only to find the property market in Spain has recovered during 2014. That's always the dilemma isn't it?

You're not alone with that one, we all buy items on Friday that go down on Monday, but go up if we decide to buy on Monday.

No one, and I mean no one, knows if the market will go down, or up over the next months / years, forget about the experts who know whats happening down to the last penny, they are not the ones who are going to buy it.

What ever price you put it up for you know someone will / might make an offer.

You don't want it, Mum don't want it, it's draining money so you know it has to be sold.

Find the  "Correct" price's they are going for in your area and put it on the market a fair bit cheaper then the others just in the hope it looks more attractive.

Work out how much a month it cost's you to have it empty, thats how much you save even if you sell it dirt cheap, if it costs you 1500€ a year to run thats wasted money, if it sold for half the buying price this 1500€ is like bank interest on the sold price.

Sorry if this sounds like the blindingly obvious but that is it.


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20 Jan 2014 09:36 by johnzx Star rating in Spain. 5247 posts Send private message


              As Baz and others have said, it depends on what price you will ask.  I would suggest that you take a trip to Spain.  That way you can check out the actual situation  re prices and likelihood of selling, and get advice re IHT versus Capital Gains Tax, and whether, as Baz says, the cost of just keeping it (and possibly of eventually being hit with IHT)  against investing the proceeds of a sale, is  better or worse.

Sensara is a somewhat unique development being, I believe, geared to retirees, (prices when new were higher than 'normal properties' because of the facilties and running cost are higher for that reason too)  so the general market may not be a true reflection of its price. Only those with knowledge particular to that development will have a really good idea re prices, saleability etc.

As for the market recovering, forget it.  Even when it does start there is so much for sale, plus the property which has not been on offer because of the low prices, which may also come onto the market !!!!!


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20 Jan 2014 20:31 by custodian1 Star rating. 5 posts Send private message

Floella, Jonzx, Baz1946,

Thanks guys for your helpful and insightful comments. I am planning to travel to the UK in May/June to see Mum. I will get a cheap flight to Spain and check things out. At least I'll be able to get free accommodation!

I'll pass your comments on to my sisters and we'll have a family meeting.

You are right, it is a retirement flat essentially. Since my wife and I are now over 55, we could stay there for a cheap holiday I guess. I'd like to start another thread asking whether it is worth buying a business and living in or around Benalmadena. I've seen some ridiculously cheap bars for sale. I've stayed there a few years ago when Mum was living there. It's very nice but full of cheap bars and somewhat third rate restaurants. I must admit, I can see myself running a bar there and my wife is an excellent cook. We both love New Zealand, but a couple of years doing something different like this in Spain sounds tempting. Hmmmmm...

Thanks again for taking the time to add to this thread!


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