As of 1 January 2017, inheritance tax in Andalucia has changed and the burden of tax becomes lighter for direct relatives inheriting assets located in Andalucia.
Inheritance Tax Threshold Increase. The minimum inheritance tax exemption for assets located in Andalucia inherited by direct relatives is increased from €175 000 to €250 000. Therefore an individual family member can now inherit up to €250 000 free of inheritance tax. This exemption applies to spouses, children and parents who are tax residents in Andalucia and or tax residents within the EU who inherit assets in Andalucia.
A further change is that for inheritances between €250 000 & €350 000, a minimum exemption amount of €200 000 is established. So if someone inherits assets of up to €270 000 they will only pay tax on the €70 000 and not the whole amount as they would have had to prior to the changes. This only applies to inheritances up to €350 000. Inheritances over €350 000 pay inheritance tax according to an asset increasing table published by the Junta de Andalucia.
Main residence. If children, spouses, grandparents or siblings over the age of 65 who lived with the deceased for two years prior to the deceased’s death and the house is the main residence of the deceased and also of the heir, then tax is payable on the main residence as follows:
Up to €123 000: 100%
€123 000 to €152 000: 99%
€152 000.01 to €182 000: 98%
€182 000.01 to €212 000: 97%
€212 000.01 to €240 000: 96%
More than €242 000: 95%
Post acquisition of the asset via the inheritance, the asset has to be kept for a minimum period of 3 years. Previously it was 10 years.
So if for example a spouse who is a tax resident in Andalucia inherits a property with a catastral value of €123 000 then they will pay no tax. If a spouse inherits an asset of €152,000, then only 1% of the value of the property would be subject to tax. However this could turn out to be zero if the total assets inherited are below €250,000.
If you wish to discuss how to mitigate inheritance tax or require assistance in dealing with a Spanish inheritance, contact us for a free no obligation consultation.