Legal Advice

Buying and selling property in Spain will most certainly involve different procedures than you are accustomed to in your home country.

However, you can make this a smooth experience by learning as much as possible about how these processes work here, and then selecting reliable professionals to walk you through each step involved.

When investing in Spanish property, you should simultaneously be thinking about drawing up a Spanish version of your will and consulting an expert regarding the possible inheritance taxes and other financial implications your purchase could generate.

Finally, if you are thinking of renting out your property, take care to learn about contractual requirements.

Inheritance Tax

A little forethought and planning can ensure that your heirs don't have to suffer through complicated legal procedures should you die in Spain. Thinking ahead can also ensure that, should your spouse die, you are not left with disastrously high tax bills.

Making a Spanish will is the first step to making sure that your Spanish assets go where you want them to. Without a Spanish version of this document, heirs must undergo a time-consuming and expensive legal process, which could include translating and certifying the validity of a foreign will. And if you have no will at all, the process could be nearly as difficult.

Spanish Wills

You should make a Spanish will to dispose of your Spanish assets to avoid time consuming legal problems for your heirs.

To make a Spanish version of your will, it is a good idea to consult a Spanish lawyer or other specialised professional. He or she can advise you regarding this country's strict rules applying to inheritance.

Spaniards are subjected to laws governing compulsory heirs. They have to leave o?ne third to be divided equally among their children, another third is to be left to their children in any division, the last third can be divided as seen fit.

A Notary however is willing (Article 9 of Spanish Civil Code) to register a foreigner's will in accordance with the law of his nationality. However some national laws, England for example, state clearly that foreign (Spanish) assets should be disposed under the law of where the assets are located. In practice this is not a problem and foreign residents can dispose of their assets as they see fit. If you believe your Will might be challenged by your children seek further legal advise and consider transferring the titles before your death.

The process of making a will involves spending time with your lawyer who will write up the document and have it notarised before it is registered in a central will registry in Madrid. This entire process costs well under 200 euros in the case of a simple, straight forward estate.

If you have assets in more than o?ne country, consider having wills in each country to avoid complicated translations, certifications and procedures for your family after your death.

You can also make a secret will and have it's envelope sealed and notarised. These also can be registered in Madrid.

Should someone in your family die without, to your knowledge, leaving a will, you can check with the "Registro Central de ?ltima Voluntad" - or Will registry - in Madrid to see if there is a registration number which could lead you to the notary office where it would be o?n file. Handwritten wills are not advisable as they must be certified as authentic before they can be executed.

How is inheritance tax calculated in Spain?

Spanish inheritance law, which is designed to protect the family structure, requires that children inherit most of their parents' estate. However, foreigners are often able to get around these requirements, bequeathing their assets as they see fit.

To estimate how much inheritance tax you or your heirs might pay in the event of death, it is first necessary to calculate how much the inheritance would be worth and then make the deductions allowed by law.

The amount an heir is allowed to deduct depends o?n his relation to the deceased. Those with the highest deductions are children under the age of 21 who can subtract anywhere between approximately 12,200 and 42,000 euros depending o?n their age. In the next category are children over 21, spouses and parents, who are allowed around 12,200 euros. Relatives such as siblings, aunts, uncles and cousins receive the substantially smaller deduction of 6,100 euros, while in the last category more distant relatives and non-family heirs get no deduction at all.

If you feel this penalises non-family heirs, you're right. And that is exactly how the system has been designed to work - in favour of families looking out for their own.

Once the value of the inheritance after deductions has been determined, your own wealth will be taken into account. And here is where you will meet with another aspect of "the system" - that which is clearly designed to favour the poor and make the rich pay. For, while at the lower end of the wealth scale you might be required to pay around 8 per cent o?n your inheritance, at the highest end, you might have to give up to 85 per cent of what you receive - directly to the government.

How to avoid excessive inheritance tax