New Andalucia Inheritance Tax Laws

September 21, 2016 by Emiliano Garcia

Inheritors get improved deal in new Andalucia Inheritance Tax Laws

If you’re familiar with Bromley Estates Marbella, you’ll know that one of our pledges is to keep up to date with any changes in property related laws. So here is our overview of two separate changes to the inheritance tax laws in Andalucia, the have already taken place and came into effect in August, the second will be rolled out as from January 2017.

Andalucia Inheritance Tax changes affecting the family home

This is a summary of the changes that took place this August The good news is that the inheritance tax threshold for main residences has increased.

There is also some excellent news for inheritors who would like to sell the property sooner rather than later. Formerly, in order to benefit from the tax exemptions it was necessary to hang on to the property for at least 5 years. This has now been reduced to 3 years.

Previously there was a national maximum allowance of €122,606 per inheritor (already permanently living in the family home) and anything above this threshold was taxed. This has changed and the allowance is now calculated on a sliding scale.

Scales per inheritor living in the family home at the time of death:

€123,000 will be 100% exempt from Inheritance tax
€123,000 and €242,000 will be calculated on the sliding scale from 99% to 96%.
€242,000 will have 95% inheritance tax exemption.

In order to benefit under these rules the inheritor must be one of the following…

A spouse
Descendent (natural or adopted)
Ascendants (parents, grandparents).
A distant relative (over 65 years) who has lived with the owner in the property for more than 2 years.

January 2017 Inheritance Tax Changes in Andalucia

Here are the inheritance tax changes in Andalucia that will come into effect at the beginning of 2017. Again there is further fantastic news for inheritors… the zero-rate threshold has been increased. This means that as from January 2017 each inheritor can receive up to €250,000 before they are liable to pay inheritance tax, as opposed to the previous rate of €175,000. This is great news for those worried about loved ones being burdened with a large tax bill when they inherit a beautiful Spanish home.

And it doesn’t end there. If you are in line to inherit say a stunning beachside apartment in Puerto Banus worth up to €350,000, there is a new standard allowing up to €200,000. This means that you would be exempt from paying inheritance tax on the first €200,000 and will only be liable on the remaining amount.

Without going into too much detail, this is a major step forward as it has simplified the system and leaves less room for errors and anomalies. It’s a win-win situation!