Do I have to declare an inheritance on my income tax return?
No. What is inherited is subject to the “impuesto de sucesiones”, the Spanish inheritance tax, not to the “IRPF”, Spain's personal income tax. But from the day of death the heir does have to declare on his or her income tax return what the inherited assets produce, such as rent or interest. And if the heir one day sells what was inherited, he or she will declare the gain on the basis of the value at which it was included in the inheritance.
Alburquerque Abogados
José Manuel AlburquerqueWhat is not declared
- The inheritance itself.
- The gain the assets had built up when the deceased died. That gain is not subject to income tax.
What does have to be declared
- Rent from the inherited flats, from the date of death and even if the estate has not been divided. Each heir declares his or her share.
- Interest and dividends generated from then on.
- Flats, commercial premises or garages that are neither let nor the home where the heir lives. “Hacienda”, the Spanish tax authority, counts 2 % of their cadastral value as income, or 1,1 % in many municipalities, for the days they have belonged to the heir.
- Whatever the heir receives from the deceased's pension plan, which is subject to income tax like a salary.
If the widow or widower has the usufruct, only he or she declares the rent, the interest and the income attributed to the flats. If the undivided estate receives more than 3.000 euros a year, an information return, the “modelo 184”, must also be filed.
Looking ahead
- On a sale, the purchase price will be the value the asset had for inheritance tax purposes, never more than it was worth, plus the taxes and notary's fees for inheriting it. If it was declared very low, the heir will pay more income tax.
- If, with what has been inherited, the heir's assets, less debts, exceed 500.000 euros, he or she may have to pay the “impuesto sobre el patrimonio”, the Spanish wealth tax. Up to 300.000 euros of the home where he or she lives does not count. With more than 2 million in assets, a return must be filed even if no tax is payable.
The deceased's own income tax return is a different matter. It is filed by his or her heirs.
This answer is provided for educational purposes and offers initial guidance on the question raised. Every matter has its own circumstances and nuances that require individual assessment. For that reason, before taking decisions with significant consequences, it is advisable to consult a professional and not to rely solely on this information. Personalised advice makes it possible to apply these explanations to the specific case and to assess the options available with greater certainty.