Advice on Spanish property tax

Hi

I was wondering if anybody could help me with some Spanish property tax issues? I am travelling to Spain next week to have a meeting with a lawyer about it all but I want to try and gather some information first so any help or advice would be gratefully accepted. Here's the situation:

Mother in law moves to Spain with fiancée in 1998 having bought a house for roughly £50k the year before
After 12 months fiancée passed away
2 years later new partner moves in
New partner spends money on the house increasing its value to an estimated €250,000
2 years ago separates from partner

We know that the deeds were never updated for the extension and swimming pool.
Fiancées will was not originally recognised in Spain and stated that his share of the property be held in trust for my husband and fiancées son, which is apparently not recognised in Spain. We have now had will translated and it is now lodged and recognised with the powers that be.

We also suspect that as the deeds were not updated that the appropriate tax has not been paid since the extension was built.

What we want to do:

Remove fiancées name from deeds to enable future selling of property and to simplify things if anything were to happen to mother in law.


My queries are:

Do you think that there is a hefty tax bill waiting for us further down the line?
Would there be any inheritance tax issues?
What about capital gains tax?
If we sorted out the deeds etc could the property be transferred to mother in laws son? If so what tax implications would there be?
If anything were to happen to mother in law would next of kin be liable for any tax debt? If so could the house be sold to settle the debt?

Mother in law is a Spanish resident but does not work. She pays a basic tax.

Many thanks for taking the time to read this and I appreciate any feedback you may have. We just want to get all affairs in order as its been lingering for too long.

Regards

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 The IHT tax related to the half of fiancée is now expired.

If thre has been no transmission of the property, there is no capital gains tax to declare

Transmission to mother in law son will depends on mother in law and fiancées´son as the other co-owners of the proeprty. There will be transfer tax involved.

At the event of mother in law death, liable party would be according to her will/ testament--- or the abintestato rules applicable if she left no will. Initially there will be a tax bill involved.

Yes, property could be sold to settle the debt.

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Thank you.

We are currently presenting a stamped architects certificate to the lawyer that shows the details of the extension. Once this is processed and the deeds updated (I imagine this is what has to be done when a property is extended and the value increases) do you think we will be liable for any back tax? We do not believe that any additional tax is paid today compared to when the property was purchased and worth a lot less.

What are the current tax rates for property taxes in Spain? Would there be an option to pay in stages or would they be likely to demand it all immediately?

Regards

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 If it is a declaration of new work before a Notary, you will have to pay Stamp Suty ( 1%) on the value of the new extension being declared.

There are several taxes in relation to Property:

Here you have a guide on taxes in Spain

You can always ask for staged payment of taxes

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 The problem here is one of the original purchasers of the property has passed away. What many English people who move to Spain do not seem to realise, and constantly seem to disregard is that any property or real estate owned in Spain is that the assests held in Spain are only covered by Spanish law, so leaving your Spanish property to your family by bequeathing it in your English will as most seem to think sufficient just does not work. Spanish law specifically states this to be the case. The only way to ensure your Spanish property is administered to your wishes is to make a Spanish will, and as soon as a property is purchased a SPANISH will should be made to ensure the property is administered properly in the event of your death.

This is especially true if you are buying a property as a joint owner, as not to do this will make problems for the joint owner in the case of your death. This seems especially true in the case of the ladies family in this thread. 

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 Johnzx, what you point out is true, the tax liability of an asset in a countries boundaries, and its (deceased) owner, but i think you misconstrued the statement i made regarding the property ownership in Spain. The bottom line of this is that once a owner dies, any property in Spain, I.e, ownership, etc, is defined and controlled by Spanish law, and not arrangements made in another country.

Therefore, if someone with properties(assets) in the UK and Spain dies, and the disposal of that property in Spain is dealt with in an English will, it is not a valid proposal in Spain. The property would then go to the Spanish equivalent of English probate, and most likely a long legal process with an obvious large legal bill at the end. The solving of this scenario is the making of a Spanish will dealing with all assets and properties, etc. held in Spain, which will then be dealt with in accordance with the requirements of Spanish law. The thing i think also needs pointing out is that if you have a partner who has an interest in any asset held by you will have a long legal problem unless the estate is defined by a Spanish will, and  is the beneficiary of that estate. This is particularly true if you have dependants or children involved, where the Spanish law may make the beneficiary of an estate different to how someone may inherit the same assets in the UK.

The bottom line is if you have ANY assets in Spain , make a will, as disposal of your estate is not as simple as it may seem in the event of your death.

Any tax liabilities in whatever country assets may generate are unaffected by your will, and must be complied with by the inheritor, and is, Johnzx, a completely separate issue, this is, i think, where you are getting confused with what i previously stated. 

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 Seems we both meant the same but somehow were are cross purposes John!

 The upshot of both of our advice is, If in Spain with Property or assets is, get down to the abogado and make a will, QUICK!!! 

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Thank you for all of the advice.

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