This is a taxing subject

Roberto,

Thanks so much for the information.

Gina

Hi Gina your friend is right - in Spain you are considered tenants in common not joint tenants and there is no spousal exemption as there is in the UK. IHT (or succession tax as it is known) is complex here in Spain and I am sure as with many things Spanish it is subject to regional variations although a standard 15,000€ or so is free of IHT. Thus assume that your property is valued at 200,000 at first death. IHT is calculated on 100k (the 50% bequeathed) - the first 15k or so is exempt thus a liability on 85k. This is charged on a sliding scale and as Roberto rightly says is subject to the relationship between the deceased and the beneficiary. Unlike the UK the burden of liability falls on the beneficary not the estate and there is no system of probate - what this means in reality is that the tax has to be discharged before the sale of the property. For more in depth you need to consult a lawyer.

hi Smiley,

Thanks for advice. It is a tough call isn't it? I knopw a lot of solicitors over here and when I was speaking to one about possibly putting the mortgage in my son's name and paying the mortgage, he pointed out that ok but what if my son married a compulsive gambling lush and got divorced leaving us high and dry. another side of the coin to consider. Does it make a difference with amount of tax payable if it is owned outright or mortgaged? If that makes sense?

Thanks Gina

Hi Gina when we are first talking with a client as long as it makes good sense we will always ask them to consider adding an heir to the Title Deed - of course only they can judge whether the relationship is solid enough or whether their offspring have reliable partners - real crystal ball stuff - and people ask me comparatively simple things such as my forecast for interest rates in Spain! Succession tax is only charged on the equity in the asset - thus if there is a mortgage on the property that amount of the property value cannot be taxed. The tax is incremental and increases at stages as in the wealthier you are the higher the % tax. Hope that answers the question. Goping back to the debate about rogue partners and relationship breakdown - I wonder how an asset held here in Spain is affected by divorce or break up law in the UK. The asset is here so it is possible that the lush from hell could not get her hands on it - hmmm interesting conundrum and I have given myself another task for the week as if I didnt have enough already.

Rgds

Hi Gina,

The wealth tax does pose a tricky conundrum. My wife and I were definately going to purchase our property outright not wanting the bother or expense of a mortgage. Now the more I delve into it the the more it seems that perhaps we will be better off having a mortgage. Mmmm!!??

Alan

Smiley, Thank you for your information. Sorry to be blond but wealth tax? Is this another word for inheritance tax in Spain.

Alan and Janice, you mentioned the wealth tax. Janice could you give me a bit more info on this and how it works and who will be billing it to us?? All confused now.

Thanks Gina

Thank you so much Roberto,

Got so caught up in excitement of completing, now need to take stock and research the more serious issues.

Kind Regards

Gina

Hi Janice,

Great information there I must say. You work so hard. Mucho appreciated. The reason for the muddle was because I started my first message asking about inheritance tax and then it sort of merged into wealth tax. Keep up the good work kiddo. But then again doesn't take a lot to confuse me. By the way I have a great recipe for homemade Sangria, you must try it if we can ever get over on the same dates. Oh my God I should be in the Sangria thread.

Gina

Gina

I have made this point before in other threads (specifically healthcare in Spain) but feel it's important to reiterate. Since this website & forum is not specifically aimed at any one area of Spain, anyone using it for the purpose of gathering information should remember that Spain is divided up administratively into several "autonomous" regions, and there can be differences in more than just language! Therefore a bit of caution is advised if reading information given by a member in a different area of Spain from you.

I gather that Candyfloss has bought in the same area as JeanSis, so no problem there, but it took me a little time & research to find out what SUMA is. Turns out, it's an intermediary body that is responsible for administering municipal taxes - in the Costa Blanca region. Never heard of it down here on the Costa del Sol. The SUMA tax JeanSis refers to is more commonly known as IBI (Impuestos Bienes Inmuebles) which is the same as UK Council Tax. Basura, is waste disposal. In Andalucia it is usually included on your water bill.

I am no tax expert, but I have a feeling that the income and wealth taxes on your property are calculated using the valor catastral (something like rateable value) which can be found on your IBI bill, rather than the value on your escritura (deed). This makes sense really, since the valor catastral can be ammended (raised!) by the council at any time, but the value on your deed will be the same until you sell the property, which could be years away. How would the council ever be able to increase your tax?!

It's true what JeanSis says about not receiving your first IBI bill for a couple of years, and this would make it impossible to work out your taxes, since you won't know the valor catastral. I wonder if perhaps her solicitor therefore worked out an approximation, in anticipation? Couldn't tell you. My main point is, taxation is indeed a very taxing subject, and whilst it's true that many foreign property owners just brush it under the carpet and hope for the best, as in the UK, things are getting stricter here, and if you want to sleep at night, it may well be worth paying a professional to handle all this for you. Just make sure you pick the right one!

Hi Roberto,

You are quite correct, in our part of Spain, Costa Blanca, our IBI tax is administered by the company "Suma".

Many people refer to it as the Suma bill, which is not correct.

It is as you quite rightly said, the IBI (Impuestos Bienes Inmuebles), and dependant on where you are in Espania, the bill may be administered by a different company/name.

To clarify the Wealth and La Renta Tax:

Wealth tax is calculated using the value declared on your Escritura.

La Renta Tax is calculated using the value assigned on your IBI bill.

Kind regards,

Like I said before, I'm no tax expert, I just spend my time Googling around for info!

http://www.spainlawyer.com/guialegal/guialegal.cfm?IDCAPITULO=11020000

Maybe Maria can shed some light on this one?

I too Roberto am no tax expert, just someone who Googled around like you!

Bless!

FAO roberto

i am new to this game and know very little (maybe even nothing)

sorry for approaching this way (i know of no other)

i am looking a what is available in torremolinos/benalmadena area (i should say i have been impressed by your contributions to various threads i have looked through) and wonder if you could tell me what might have happened on the los altos del olivar site in your area. i went into the site in "eos" and found one question (mar06 i think) and no replies.

can you tell me anything about this complex it was being built the last time i was there......

again i apologise for changing the subject but .......

thanks

Seems none of us are experts on taxation; I quote from my post earlier:

My main point is, taxation is indeed a very taxing subject....... as in the UK, things are getting stricter here, and if you want to sleep at night, it may well be worth paying a professional to handle all this for you. Just make sure you pick the right one!

'Nuff said.

Irishrorio, I will send you a private message (PM) which you can reply to by clicking on the link in the e-mail (which will be from EOS)

When completing form 214 is the value to be declared the net purchase price or the gross including the IVA ??