Vaguely related to property in Spain

[Sara]

Hello to everyone renting in Spain. I'm renting in Greece but I have a non rental question that someone may be able to help me with...

My parents live in Spain and own a villa. Recently I was talking to my father and he said that putting the villa in my name now was too expensive so I will have to deal with the inheritance tax issues when they arrive. I have no idea what it costs to "gift" the villa now nor do I know what inheritance tax I can expect to pay ( hopefully not for a long time). Does anyone know by chance what are the percentages involved as I would prefer to pay for the transfer of name now if it helps to beat the Spanish tax man in the long run. Someone told me that the inheritance tax cannot be taken from the amount to be inherited. That seems crazy - how do people find hundreds of thousands of euros?

Any knowledge would be greatly appreciated. Morbid subject but I wonder if my father has been given bad advice.

Sara

[Bellywobble]

I can't remember the figures involved but Spanish inheritance tax is high, and yes it does have to be paid before a property can be sold or passed on! I believe this is why a lot of Spanish people put their property into their children's names.
I think you would be wise to look further into putting the property into your name now, if possible. The best thing must be to find a reputable lawyer ( I have a good one who works from Malaga and Velez-Malaga), if your father is anywhere near to these places, I can let you have the details if you send me a PM.

[reddevil]

I think inheritance tax is 40%

[Alan Knighting]

Sara,

Spain imposes both inheritance and gift taxes. The rules are far too complicated to discuss in a forum and Kayley's advice is the best, take proper legal advice!

The taxes are paid by the beneficiary and not by the estate. There are various allowances and there is the % age tax rate is on a sliding scale.

One advantage in paying gift tax now, if you can afford it, is that the tax would be calculated now and not at the time of death.

Alan

[Sara]

Thank you for replying. I will think about consulting a Spanish Lawyer. I just feel a bit devious trying to find out these things without speaking to my parents!

Sara

[Alan Knighting]

Thank you for replying. I will think about consulting a Spanish Lawyer. I just feel a bit devious trying to find out these things without speaking to my parents!

Sara

You are so right in being cautious about this.

Your parents will not be paying the tax in the long run, as the beneficiary (I assume that’s what you are under the terms of their wills) you will have to pay it and you will have to raise the cash to do so.

But, if you try to deal with it now on the basis of a "gift" your parents will quite rightly be very nervous indeed. After all, making a gift would mean that they would lose legal title. What if they changed their minds in the following years? As a parent and someone coming up to his 70th birthday it would make me nervous too.

In the UK where the concept of trust (by that I mean a legal trust) is well established it is difficult enough to convince the elderly that they are NOT giving away their home and their security. In a foreign legal system which does not necessarily recognise what a legal trust is at all, it is approaching the impossible.

What I would say is this. Take legal advice on the possibilities and ramifications in Spain. Armed with that advice, decide whether or not to approach your parents with a proposal.

Whether or not the proposal is legal, whether or not the proposal is tax efficient matters not. You may finish up as appearing to be the avaricious daughter and that’s not what you want to do. Your relationship with your parents is much more important than the tax bill at the end of the day.

I’ve probably already said too much. PM if you want to continue this on a personal level.

Alan

[Nightowl]

That's really good advice, Alan. it's so easy for something that is well intentioned to start out with to turn into a big family bust up unnecessarily.

My mum is in her mid 80s and she has 6 of us... one of my sisters feels mum should sort out her bank affairs so that if she became ill or incapacitated, we could make sure all her bills etc are paid, (there is no ulterior motive, honestly). Mum feels this isn't necessary, she's pretty fit and she feels that there's enough of us to keep her going short term and if she suddenly became incapacitated it doesn't take that long to sort it out. I can see her point, I just don't think she's comfortable with anyone else being involved in her private affairs. She will make the decision when she's ready and won't be pushed by anyone else. Part of being independent I guess. And I think if any of us did really push it, she would really get cross. So take Alan's advice and tread carefully...