What happens if I do nothing?

My mum owned a house in Murcia which we used for holidays. She died in January. All the bills etc are paid by standing order. I'm wondering what would happen if I do nothing and just keep things as they are? I don't want to sell but I suppose it isn't legal to just say nothing? Anyone been in the same situation?

I   think you will be liable for inheritance tax on the property if you are the beneficiary.

Unfortunately, in Murcia regional allowances against IHT were abolished in 2013, so there is only the state allowance of just under16 k euros to offset against it

You cannot sell the property until the tax has been paid( within 6 months.)

Did she make a UK or Spanish will? You will need to see a solicitor

I assume she has a Spanish bank account.

You will have to inform the bank.

Camposol's comments are good, including the fact you need legal advice.  Don't be tempted to avoid playing it straight, the penalties could be severe.

teesdale, i forgot to mention  that when you inform the Spanish bank, they will freeze the account.

Any money into the account will be taken into consideration when working out the Inheritance tax.

You will then have to open a non resident account, so that utility bills can be debited, so you will have to inform Anyone to whom direct debits are made, eg utilities, insurance, town hall for IBI etc and get new contracts in your name ,

If payments are not received by utility companies, they could put an embargo on the house.

As your Mother died in January you haven't much time to sort the Inheritance tax , as it must be paid within 6 months or interest will be added and increased as time goes on.

The good news is that since a EU ruling at the back end of last year you won't be asked to pay anymore tax than a resident would pay.

 The bad news is that non residents and residents get no regional allowances at at all, as they wer abolished, so residents have been paying the same as non residents since 2013!

A terrible state of affairs for anyone bereaved , who has left everything to their spouse!

Is it not true that one would get the state relief of 95% of the value of the house, subject to a maximum of €122606.47 per inheritor, plus the 16000 personal relief, provided one retains ownership of the property for 10 years? It would not be required to use the house as a main residence during those 10 years, so letting it is possible..

I' m not sure if it is still the case, but it is small comfort to most.

I have heard that in Murcia you do actually have to live in the house , perhaps Maria will put me right on this.

most would downsize or sell needing the money from the sale to start a new life.

It would be like a millstone round the neck, needing maintenance, IBI,  and then ther would becgt when eventually sold.

The state  allowance is miserly, not been increased for years.

something must be done about IHT in Spain, in regions like Murcia,  or people will be put off moving here, though some don't research it before moving here, and then get a shock when the inevitable happens.

Hmm! All sounds a bit grim! Looks like I need a good lawyer and quick. I have read that if you apply within 5 months of the death you can get a 6 months extension on Iht payment date, so I'd better get moving! Sounds like it's going to cost me a few bob. Not really keen on the house but selling it isn't really an option - next door to it has been for sale for 4 years. Can I offset the IHT against what I have to pay in IHT on it in UK, does anybody know?.

I don't think there is a double taxation treaty with IHT as there is with income tax.

The problem is Murcia having no regional allowances, leaving only the measly state allowance of 16 k

As you say, you need to act fast and find a good Spanish lawyer

Why do you say selling is not an option, once you have paid the tax? 

I would get rid of it, even if you had to sell it a lot cheaper, unless of course you wanted to retire to Spain?

The OP Teesdale asked what would happen if she just did nothing. Assuming she is a beneficary in her mothers will the notary usually would then transfer ownership and IHT would be payable. I know of many people over the years who have just done nothing, husbands and spouse especially. Bank accounts continue to operate for those who have died if nothings done but eventually a day of reckoning arrives when signatures are needed for something minor. Then you have to either commit a criminal offence or come clean. Also I'm sure there is a law somewhere requiring you to inform the authorities of a relatives death. It's criminal tax avoidance by any other name.

Unfortunately you have to pay the IHT before the notary transfers the property, you can't even borrow against the house to get the money to pay the IHT as it's not in the beneficiary's name.They don't make it easy.

I understand the satute of limitations is 4 years for non payment of IHT, in that time you run the risk of having the house seized and sold.

Teesdale:

IHT taxes paid in Spain will not collide with the IHT paid in the UK as they are of two different jurisdictions. Spain taxes just property located in Spain. You do not have to pay taxes for that in the UK.

Some people do nothing for avoiding costs. Only danger are the interests Treasure might be able to impose on you