When it comes to taxes, usually the taxpayer is interested in declaring the acquisition of goods for the lowest value possible. The lower the value, the lower the taxes: that is printed in gold in all of our heads.
That is correct. However, the decision should take into consideration future actions. Are you thinking about selling the inherited property? Then, you may be interested in declaring the highest value possible. Does this not make sense? Let’s see why.
When it comes you you Inheriting Property in Spain, you have to pay the succession tax. In order to calculate it, you have to declare the value of the property, and usually you can choose between the market value and the official value.
The official value is typically lower because it does not move as fast as the market. Thus, with the exception of a real estate crisis, the value is far from the one on the market.
The key here is that, in many cases, the succession tax has discounts for direct heirs, who are the children of the deceased.
Now, when you sell the property, you have to declare the difference between the acquisition and the selling prices for the income tax. The higher the difference, the more you have to pay.
Therefore, if the law offers you the opportunity to have an exemption of payment in the succession tax, declaring the highest price possible may be economically interesting when we look at it from the perspective of the future selling. We may need to pay more now, but this amount will be decreased because of the exemptions, and we will also be decreasing the amount to pay later for the income tax.
As you see, when it comes to Inheriting Property in Spain, it is important to keep in mind your intentions for the future and always calculate the economic results of different decisions.
Please keep in mind that this post is only written to give you an idea about what you could do. But in order to know if this would be accurate for your situation, we would need to know your personal situation.
What is important here is to be aware that the most obvious or direct decision is not always the best one. You need someone who knows the succession and tax regulations properly to give you advice.
Do not hesitate in contacting us to get help about any issue related to Spanish probate.