According to Mark Roach, Company Director and Spanish Tax Consultant at Wincham Consultants, non-resident property owners in Spain are sitting on a ticking IHT time bomb. ?Most owners do not understand that their heirs and their estate will pay IHT in two jurisdictions, Spain and their Country of Domicile?, says Mark in an article for the Euro Weekly News.
Mark continues: ?The reason for this is that in Spain it is the beneficiaries who are taxed whereas in other countries, like the UK, it is the estate that is taxed. This could mean that on the death of an owner the surviving partner, or the owner?s beneficiaries, could have a tax bill that virtually wipes out the entire Spanish Inheritance?.
The article also points out that beneficiaries should be aware of the cost of probate in both countries too, and says that most lawyers in Spain recommend to owners that having a Spanish Will deals with the problem, although a Will only deals with the issue when there is a death but does not remove taxation in Spain.
Mark says that double taxation treaties between Spain and the UK will not help with the tax being reduced, despite many claims to this effect. It should not be assumed that one tax can be offset against the other as they are both totally different taxes on totally different entities. Re-financing the property so that IHT is not charged on the property amount when there is an outstanding mortgage and loan is another common piece of advice, but this may end up leaving the beneficiaries with a huge debt they cannot pay off and many lenders will only finance the ownership if suitable life insurance is taken out, so the property is paid for on death and the tax still becomes due.
The article continues: ?Owning a property with your children is a favourite, this is not a good idea either as their share of the property may end being at risk through financial or marital issues and if they die before the parents then the parents have to pay taxes to get the property back?.
Inheritance Tax is a clearly a complicated issue and one that requires careful consideration by Spanish property owners. One thing is certain, and that is that when buying a property in Spain it is vital to get proper legal and financial advice before making any crucial decisions.
Altavista Property Spain can help you to find a suitable bilingual lawyer, so please do ask if you?re unsure or don?t already have one. We have a shortlist of independent law firms who have already successfully helped other clients to buy their homes through us, who we?re happy to recommend.
Related posts:
- Altavista Spain ask: Spanish or British Property Lawyer?
- Alta Vista Property Spain ? www.altavistaspain.com ? Changes In Spanish Law Make Evictions Quicker
- www.altavistaspain.com ? Spanish Property Prices at "All Time Low"
- Alta Vista Spain ? Michael Liggan News ? Positive News for the Spanish Property Industry
- Altavista Spain Property news: C?diz house owner gets the family home back one century on
infiniti empire state building amazing grace wtc united 93 united 93 loose change
No comments:
Post a Comment