Inheriting a property in Spain can bring unexpected legal and administrative responsibilities, particularly if you live in the UK and have no intention of keeping the property. Before it can be sold, the inheritance must be formally dealt with in Spain, ownership must be established and the relevant taxes and documentation must be addressed.
For UK residents, the process can involve dealing with Spanish notaries, obtaining official certificates, arranging translations and understanding tax obligations in two countries. Knowing what needs to happen before putting the property on the market can help prevent unnecessary delays and complications.
Establishing Your Legal Right to Inherit the Property
The first step is to establish who is legally entitled to inherit the Spanish property. This will depend on whether the deceased left a valid will, their nationality, where they were habitually resident, and whether they made an effective choice of law in their will.
Under the EU Succession Regulation, which applies to deaths occurring on or after 17 August 2015, the law of the deceased’s habitual residence will generally govern the succession. However, individuals can choose for the law of their nationality to apply to their estate.
This distinction can be particularly important for British nationals who owned property in Spain. The applicable inheritance rules may affect who is entitled to receive the property and how the estate must be distributed.
If there is a Spanish will, this will need to be obtained alongside the relevant certificates. Where there is no will, additional legal steps may be necessary to establish the beneficiaries and their entitlement to inherit.
A Spanish lawyer can help determine which country’s succession laws apply and what documentation is required before the property can be transferred.
Completing the Spanish Inheritance Process
Even if you have already been recognised as a beneficiary under a UK will or probate process, this does not automatically transfer ownership of a Spanish property into your name.
The inheritance must be formally recognised and dealt with under the relevant Spanish procedures. This will usually involve obtaining the necessary documents and arranging a deed of acceptance and distribution of inheritance (escritura de aceptación y adjudicación de herencia) through a Spanish notary.
Depending on the circumstances, the documents required may include:
- The deceased’s death certificate.
- A copy of the relevant will or declaration of heirs.
- A certificate from the Spanish Register of Last Wills.
- Identification documents and NIE numbers for the beneficiaries.
- Evidence of the property’s ownership and Land Registry details.
- Relevant UK probate documents, where applicable.
Documents issued in the UK may need an apostille, certified translation or other formal authentication before they can be accepted by Spanish authorities. The precise requirements will depend on the document and the circumstances of the inheritance.
Once the inheritance has been formally accepted and allocated, the new ownership can be recorded at the Spanish Land Registry (Registro de la Propiedad). This is an important stage before proceeding with a sale.
Understanding Spanish Inheritance Tax
One of the most important considerations for UK residents inheriting property in Spain is Spanish Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones).
Spanish Inheritance Tax can apply to property located in Spain even when the deceased and their beneficiaries are not Spanish residents. The amount payable depends on several factors, including the property’s value, the relationship between the deceased and the beneficiary, and the applicable regional tax rules.
Spain’s autonomous communities have their own inheritance tax allowances, reductions and reliefs. Consequently, the tax position can vary considerably depending on where the property is situated and the circumstances of the inheritance.
There is also an important deadline to consider. Spanish Inheritance Tax generally needs to be declared within six months of the date of death. An extension of a further six months can be requested, provided the application is made within the first five months of the original period. Interest may apply where an extension is granted.
Missing the deadline can result in additional costs, making it important to seek advice early, even if the beneficiaries are still gathering the necessary paperwork.
What Taxes Apply When You Sell the Property?
Paying Spanish Inheritance Tax does not necessarily mean there will be no further tax liabilities when the property is sold.
Several other taxes may need to be considered.
Capital Gains Tax
If the property increases in value between the date of inheritance and its eventual sale, a capital gain may arise. For UK residents who are not tax resident in Spain, Spanish Non-Resident Income Tax (IRNR) may apply to the gain.
The acquisition value used for the calculation is generally linked to the value declared for inheritance tax purposes, subject to the applicable rules and allowable costs. The eventual sale price and qualifying expenses will also be relevant.
Municipal Capital Gains Tax
Spanish municipalities may also charge a tax known as Plusvalía Municipal. This relates to the increase in the value of urban land during the period of ownership.
The tax can arise when a property is inherited and again when it is subsequently sold. The calculation and whether any exemption or relief applies will depend on the circumstances.
Non-Resident Tax Withholding
If you sell a Spanish property while remaining a non-resident for Spanish tax purposes, the buyer is generally required to withhold 3% of the purchase price and pay this to the Spanish Tax Agency.
This is an advance payment towards the seller’s potential Non-Resident Income Tax liability, rather than a final calculation of the tax due. The seller must submit the appropriate tax return to establish the final position and claim any refund if too much has been withheld.
UK tax obligations should also be considered. Depending on the deceased’s and beneficiary’s circumstances, the inheritance and subsequent sale may have UK tax implications. Professional advice can help establish whether any relief is available where tax is payable in both countries.
Can You Sell an Inherited Property Without Travelling to Spain?
Living in the UK does not necessarily mean you need to travel to Spain every time a document needs signing or a legal formality needs completing.
In many cases, a Spanish lawyer can act on your behalf using an appropriately prepared power of attorney. This can allow certain administrative and legal procedures to be completed without you having to attend appointments in person.
A power of attorney must be properly drafted and executed, with any necessary authentication and translation arrangements made before it can be used in Spain.
This can be particularly useful where several family members have inherited a property but live in different parts of the UK or overseas.
However, the arrangements will depend on the nature of the transaction and the requirements of the Spanish notary and other relevant authorities.
What If Several Family Members Have Inherited the Property?
Inherited Spanish properties are often passed to several beneficiaries, particularly when parents leave a property to their children.
If the beneficiaries intend to sell, they will generally need to agree on the transaction and ensure that the legal ownership and inheritance arrangements are properly completed.
Disagreements can make matters more complicated. One beneficiary may wish to sell immediately, while another may prefer to retain the property or use it as a holiday home.
Possible solutions include one beneficiary buying out the others, agreeing to sell and divide the proceeds, or exploring the legal options available to end the shared ownership where agreement cannot be reached.
It is advisable to address these issues before committing to a sale, particularly where the beneficiaries have different expectations or live in different countries.
How a Spanish Lawyer Can Help
Selling an inherited property in Spain involves more than finding a buyer and signing a sale agreement. The inheritance must first be properly established, the relevant taxes addressed and the legal ownership arrangements completed.
For UK residents, having a Spanish lawyer who understands cross-border inheritance matters can make the process considerably easier. They can help obtain the necessary documentation, liaise with Spanish notaries and tax authorities, advise on the applicable inheritance rules and arrange the legal formalities required to sell the property.
At Jorge Iguacel Spanish Lawyers, we assist UK residents with Spanish legal matters, including inheritance and probate. If you have inherited a property in Spain and are considering selling it, our team can help you understand the steps involved and the legal requirements that apply to your circumstances.
Contact us to discuss your circumstances and find out how we can assist with your Spanish inheritance matter.