Can anyone explain about inheritance tax in Tenerife?

[barryk]

Hi,

I am trying to understand my Inheritance tax liability to my heirs, but am totally confused.

Does anyone have a quick and rough calculation method to give me an idea for future planning.

My property assests are approx 100K with liitle capital in Tenerife.

I am a non resident and would wish to leave my assets to my two step sons (half shares).

I know that there are tables charts and mulipliers and some quidance would be useful.

Also I have heard that some beople transfer their assets, with lifelong use clauses/agreement to avoid IHT.

Does this work????

Many thanks

Barry k

[9PLUS]

Goldenmaniac

[candy2411]

Goldenmaniac

I'm sure she's the best person to give advice but would be useful if she could maybe put comments on here for everyone to read or she may be inundated by messages from lots of people in same situation ( myself included!:dontknow:)

[delderek]

All I can say is: Its something never mentioned when you purchase. But it is a big sting in the tail. Best advice, sell up and do a long term rental before it happens. Simple formula 30% of the value, if jointly owned 15%. Not worked on any profit but on the value determined by the authorities, which could be a lot higher than you could sell for. A really awful tax between spouses.,

[Dreamer]

have a look through here........http://www.diana-mcglone.com/

[Tom & Sharon]

Hi,

I am trying to understand my Inheritance tax liability to my heirs, but am totally confused.

Does anyone have a quick and rough calculation method to give me an idea for future planning.

My property assests are approx 100K with liitle capital in Tenerife.

I am a non resident and would wish to leave my assets to my two step sons (half shares).

I know that there are tables charts and mulipliers and some quidance would be useful.

Also I have heard that some beople transfer their assets, with lifelong use clauses/agreement to avoid IHT.

Does this work????

Many thanks

Barry k

So, are you asking about inheritance in the UK then?

Can you be more specific?

[junglejim]

This is Goldenmaniac ´s website advice ,though your post doesn´t make it clear if you have property in Tenerife . Your will in UK and Spain should make your wishes clear.

http://www.diana-mcglone.com/#inheritancetax

[barryk]

Hi,

The property in question is in Tenerife and I have already maide a Spanish Will.

My current asumptions are that the people who will inherit my estate are classed as group 3 and would have an allowence of aprox 8K.

Thus if the property was worth 100K then that would mean a liability of 50K each

Deducting the allowence would leave a balance of liability at 42K each

Based on the chart on Diana's website that would mean a tax of 42000x12% (approx) = £5040 each plus charges

Please could someone confirm if these assumptions are broadly correct or if I am way off the mark. There would be very little other assets except the property

Thanks

Barryk

[bulldog]

might be worth looking into transferring in to their names now at the lowest price possible
with a power of attorney in your name to protect you whilst alive maybe they,re pay the
transfer taxes, either way there,s taxes to pay.:(

[golf birdie]

might be worth looking into transferring in to their names now at the lowest price possible
with a power of attorney in your name to protect you whilst alive maybe they,re pay the
transfer taxes, either way there,s taxes to pay.:(


Correct, I think they would need to pay tax on the transfer which is something like 6%.

[doreen]

might be worth looking into transferring in to their names now at the lowest price possible
with a power of attorney in your name to protect you whilst alive maybe they,re pay the
transfer taxes, either way there,s taxes to pay.:(


I'm not sure this is a solution ... they would be subject to Gift Tax which is the same as Inheritance Tax and you have the additional costs of the transfer 6.5% plus relevant Notary & Gestor costs

https://www.cfe-eutax.org/taxation/gift-tax/spain

[barryk]

Hi,

Looks like the transferring of the property would be just as expensive as the IHT and have risks. Would be grateful if anyone could confirm if my assumptions in post#7 are correct in respect of my potential liability at the the present time.

My current assumptions are that the people who will inherit my estate are classed as group 3 and would have an allowance of approx.. 8K.

Thus if the property was worth 100K then that would mean a liability of 50K each

Deducting the allowance would leave a balance of liability at 42K each

Based on the chart on Diana's website that would mean a tax of 42000x12% (approx.) = £5040 each plus charges

Thanks Barry

[delderek]

Hi,

Looks like the transferring of the property would be just as expensive as the IHT and have risks. Would be grateful if anyone could confirm if my assumptions in post#7 are correct in respect of my potential liability at the the present time.

My current assumptions are that the people who will inherit my estate are classed as group 3 and would have an allowance of approx.. 8K.

Thus if the property was worth 100K then that would mean a liability of 50K each

Deducting the allowance would leave a balance of liability at 42K each

Based on the chart on Diana's website that would mean a tax of 42000x12% (approx.) = £5040 each plus charges

Thanks Barry

I am not an expert, but I think your figures are about right, but you have to add in the extra legal costs of employing lawyers in Madrid, as I believe it can now only be finalised on the mainland. So add a couple of thousand to your figures for the sharks.

[Dizzykitty]

based on 100.000 euros theyd pay 4158.62 euros each

100.000 + % ajuar / 2 - 7993.46 = 43506.54
39943.26 = 3734.59 + rest at 11.90% = 4158.62 euros total each

In the event of you selling them the 100% of the property and you keeping the life interest of it the taxes and costs (notary registry etc) would be 7500 euros max

and no lawyers needed in Madrid for the inheritance taxes people who say they need them dont know what they are doing.

[essexeddie]

Are these the same figures between spouses. Would be nice to know as it will effect us all one day. Always been a dodgy issue.
I have my own ideas but wont put it on here.

[golf birdie]

Are these the same figures between spouses. Would be nice to know as it will effect us all one day. Always been a dodgy issue.
I have my own ideas but wont put it on here.

I believe if it is your main home and you keep it as the main home for 5 years after death there is no tax to pay.

[delderek]

Are these the same figures between spouses. Would be nice to know as it will effect us all one day. Always been a dodgy issue.
I have my own ideas but wont put it on here.

Basically ,,Yes. That is why I sold up to get out of this awful tax. You could do worse than look at J. A. site under property and officialdom.

[Norm de Plume]

Might be worth waiting. As a result of my complaint to Brussels about discriminatory IHT on nonresidents, there is a case due to be heard soon before the European Court.

[essexeddie]

I believe if it is your main home and you keep it as the main home for 5 years after death there is no tax to pay.


No its not my main home, we live in the UK but spend about five months in Tenerife per year. We don't let.

.

[marbro8]

it looks like you are better off selling up and renting, and leave as little as possible;)

[Ecky Thump]

Hi,

I am trying to understand my Inheritance tax liability to my heirs, but am totally confused.

Does anyone have a quick and rough calculation method to give me an idea for future planning.

My property assests are approx 100K with liitle capital in Tenerife.

I am a non resident and would wish to leave my assets to my two step sons (half shares).

I know that there are tables charts and mulipliers and some quidance would be useful.

Also I have heard that some beople transfer their assets, with lifelong use clauses/agreement to avoid IHT.

Does this work????

Many thanks

Barry k

Maybe it would be better to pay for the services of a Spanish tax and inheritance professional than be guided by us
"Armchair Experts";)

[PaulAdvisor]

If you are non-resident in Spain for tax purposes, meaning that you have not submitted a full resident tax return for most of the time during the last 5 years, then as a non-resident based on an 100,000 Euro property left to your two step sons, the rough calculation is: -

- Tax due to each beneficiary is circa, 4,000 Euros, However this is multiplied by 1.588 as they are group 3 beneficiaries so the "bill" may be over 6,000 Euros.

Please be aware that it is not the estate that is taxed in Spain but the amount each beneficiary receives. If you were to gift the property now, the tax due would be slightly more. Hope this helps.

[Suzanne]

So Paul Advisor, if my friend wanted to gift his property to his daughter, valued at aprox 120.000 euros what would the tax be. more or less? many thanks.

[barryk]

Following Pauls post #22 then the calculation would be

Value of inheritance, less allowences =taxable amount x tax rate=tax due x 1.5(non resident muliplier)

The muliplier is applied at the end.??????

Tax tables available on Dianna McGlone's web site

Barryk

[PaulAdvisor]

Hi
I will come back to the calculation later as I am "on the road" For now, please be aware that the multiplier has nothing to do with being non - resident...it is because of the relationship between the deceased and the beneficiary (ies)

[essexeddie]

If you are non-resident in Spain for tax purposes, meaning that you have not submitted a full resident tax return for most of the time during the last 5 years, then as a non-resident based on an 100,000 Euro property left to your two step sons, the rough calculation is: -

- Tax due to each beneficiary is circa, 4,000 Euros, However this is multiplied by 1.588 as they are group 3 beneficiaries so the "bill" may be over 6,000 Euros.

Please be aware that it is not the estate that is taxed in Spain but the amount each beneficiary receives. If you were to gift the property now, the tax due would be slightly more. Hope this helps.


That calculation doesn't sound too bad to me? After all that's quite a windfall for them.


.

[atlantico]

but isn't Inheritance Tax payable BEFORE you can inherit the property, or sell it. In the UK they allow sales of property to help fund the IHT payment. So a poor heir has to find that €6-7k first !

[delderek]

That calculation doesn't sound too bad to me? After all that's quite a windfall for them.


.

But what if you dont have the ready money to pay the govt. How many people could readily find 6000 euros. And then of course interest would be added if you cant pay

[essexeddie]

I think if I was going to inherit €100,000 I would soon find €6000 pronto


,

[delderek]

I think if I was going to inherit €100,000 I would soon find €6000 pronto


,

Maybe. But just remember this tax applies to your surviving spouse this is where it is very unfair. Loosing your partner and then having to find thousands of euros. Just to keep what you have already paid for.

[9PLUS]

I think if I was going to inherit €100,000 I would soon find €6000 pronto


,



Yeah Eddie we could mate, buddy, pal, friend


just thinking of the future

[golf birdie]

it is the most unjust tax. Tax is paid when the property is purchased and again when it is left to your family. That is just wrong. Also tax is payable on any savings or life insurance.

[barryk]

Please could anyone confirm if the amount for calculating the value of property for inheritance tax is the castastral value the market value of the property or any of the two plus a multiplier
If a multiplier is to be used what is the value in Tenerife

Thanks
Barryk

[PaulAdvisor]

The property value used for calculation of death or gift tax in Spain is either the catastral calue or the rates value; whichever is the higher of the two. However, there is potentially a third value that can be used for this purpose - what is happening more often is that the local tax office are looking at the value of the properties for sale in the complex/area in which the said property is situated and providing the valuation themselves!

Hope this helps...P

[barryk]

Many thanks to Paul and everyone else who have supplied information on this post. I am a lot clearer on my committments in respect of this confusing tax and I am sure the posts have answered queries other members have had.

Once again my sincere thanks to all cotributors

Regards

Baryk

[Tom & Sharon]

A friend of mine has just lost his father, who jointly with his mum owned a holiday apartment in Tenerife.

They have had a pretty big shock. The solicitor who wrote their Spanish wills has quoted them around 10,000€ in tax, 5,000€ for his own fees and 1,800€ for notary fees. That's just to transfer the full ownership into his mum's name!

His mum no longer wants to come to Tenerife without his dad, and wants to sell it. She has to pay the above first to enable her to sell it. Then she has more legal and notary fees to sell, 5% agent fees and a further 3% tax to pay. They've only owned the property for 6 years when they paid a load of taxes and fees to purchase.

To give you an idea, it is worth probably 175.000€ Max.

The whole thing is a nightmare, and I think completely unjust. I have no idea where the Spanish get these figures from, or how they can justify them.

It is making us think it is better to sell. Other countries don't have these ridiculous taxes and charges between spouses.

[barryk]

Hi

This is when the dream becomes a nightmare. Some useful information may be found here:

http://www.diana-mcglone.com/#inheritancetax

Warning: Read only if of a strong disposition.

Barryk

[delderek]

Inheritance tax is the reason I sold up after 20 years. And of course it is not "If" it happens it's "When". It is a really awful tax.

[Ecky Thump]

If you want to get help about the inheritance of Taxation in Tenerife so you have to follow tanner mainstain (https://www.linkedin.com/company/tanner-mainstain-blatt-glynn-&-johnson/).They know well about the Taxation and its all policies.So may they helps you in a better way.

Please tell me if I'm wrong, but I think you are posting on this forum purely in the interest of promoting one company ....
Tanner Mainstain!