inheritance tax planning us

inheritance tax planning us

Spanish Property - property tax and inheritance tax

We have many customers who have bought in Spain or the Balearics or think about it.

In recent years there have been some changes in how the Spanish government imposed on those who are in UK and Spanish property, but with a change of government, this could still change.

Here we see two aspects - Wealth Tax and duties succession.

Wealth Tax

This applies to the ownership of assets less allowable expenses and debts. Among its real estate, vehicles, cash, stocks, jewelry etc. Consequently, wealth tax is calculated on the net worth of a person duly registered as mortgage, taxes and loans.

Spanish residents are not subject to wealth tax on assets situated Spain. This also means that benefits residents in Spain who are not eligible for a non-resident. Thus begins the tax on all assets held in Spain for a non-resident.

The form in which the property is valued, and most of the wealth is normally held here, is based the greater of:

- The taxable value

- The cost of acquisition

- The official evaluation by tax authorities

There are special rules for evaluating bank balances and like other assets.

What are the tax rates?

Well, are annual and vary from 0.2% (to € 167,129) to 2.5% (higher to € 5,347,998). Perhaps the most common would be 167,123 to € 334,246, where tax is 0.3%, and 334,246 to € 668,499 at 0.5%. The progressive tax, so lower the amounts paid to the group level and then the next highest level in the other, etc.

Thus, if you say worth € 400,000, your annual tax bill would be € 1165. This is not the end of the world, but it is important to consider.

Inheritance Tax (IHT)

This tax is calculated on the receiver - the heir - and if a resident can not normally be imposed on Spanish assets.

One of the main things to understand here is that there is no spousal exemption. Thus, If you own property jointly, and one of you dies, the surviving spouse is subject to tax on the value of the half!

Tax rate from 7.65% to a maximum of € 7993, 34% above € 797,555. It is then subjected to another calculation based on the relationship of the heir of the deceased, and their own wealth.

Thus, as a rough example, if the deceased spouse's share, amounting to € 160,000, then the bbc would approximately € 23,000.

One action point is very important to ensure that you have a Spanish will, and to report to his lawyer the United Kingdom is to ensure the Testaments are linked. Then comes the Spanish law and Spanish assets in the United Kingdom with assets in the United Kingdom.

The main Benefits to a Spanish will be the following:

- There would be delays, extra work and costs involved in relying on the will the United Kingdom for the sale of its assets in Spanish

- If you do not have a will and died intestate, then the property will be distributed under the laws of intestate succession. This means that third parties decide who inherits your assets, and among children in many countries for joint

- If you are not of Spanish nationality your Spanish will also specifically you want your will to be governed by the laws their own nation

It is noted also obtain a loan against property is Spanish reducing IHT liability.

This is based on our current understanding of the Spanish law. The advice above does not cover all aspects of buying in Spain, and if please be sure to get reliable professional advice.

Useful Website - http://www.taxcafe.co.uk/march2008.html (article until half page)

Key factors:

If you plan to invest abroad, be sure to take all factors into consideration: - Choice at any time.

MEASURE

If you have a property in Spain, you find that all loans based in Spain, and if Spaniard you will, do it now and link it to your UK!

About the Author

Ray Prince is an Independent Financial Planner with Rutherford Wilkinson plc, and helps UK Resident Doctors and Dentists get the best deals on mortgages, protection and investments, as well as helping them achieve their financial objectives. Click here for Financial Advice for UK Doctors and Dentists and to get your free retirement guide, How To Avoid The 7 Most Common Retirement Planning Mistakes. Rutherford Wilkinson plc is authorised and regulated by the Financial Services Authority.

Tax Planning & Diversification of Personal Wealth-Part 3

 

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