Real estate finance in Majorca Spain - Mortgage finance

Inheritance tax in itself is something we all want to avoid for our beneficiaries and there are very strange and wonderful ways for the two hypothetical structures and real I've seen. Most of us do not fall within these structures, simply because the cost of creating instead of these is prohibitive and most of us cost more than the tax they are launched to try to avoid.

However, there are some simple things to consider when buying property in Mallorca and how structuring and financing the purchase, you will ensure that beneficiaries pay little tax as possible.

Spanish Inheritance Tax is applied the fair value of assets inherited and the proportionate amount of the assets they inherited. Although there are many values that can be considered, for real estate, the real value property market is being used (compared to the value of city property for example).

It, therefore, if the husband and wife joint ownership, unless otherwise indicated, each has equal parts, so that 50% of the property. If you expect death and spouse's name as the benefactor, proportional amount of property that is inherited is 50%.

This means you only pay tax on half the assessed value of cheap majorca property. Hence, € 500,000 property, the beneficiary would be required to pay inheritance tax at 250,000 euros.

Now consider the case where there is a mortgage on property. This means that the fair value of which is inherited from the market value is less than the mortgage. Consider the example of a property of € 500,000 to € 400,000 mortgage, then the reasonable value of what is inherited and therefore subject to tax is reduced to 50,000 euros.

Now let's say add 2.2 children to the structure of purchase! OK, two sons, then we have 4 owners, each with a quota of 25% ownership. In this case, if, as he had a mortgage of € 400,000 and the first beneficiary is the spouse, the amount of inheritance tax is now reduced to 25,000 euros.

Note: Please note the figures above give an inheritance tax liability than the amount of tax to pay! To consider the mortgages against property, should be given a Spanish mortgage in the register of property ownership.

Therefore, to minimize inheritance taxes to pay for its beneficiaries, to put it in the title, Mortgage and remortgage property in Spain (remember if the price of housing is substantially revalued, it is the responsibility of the estate tax) to as much as possible. Even if you do not need additional capital, seize and use the capital released by the mortgage for other investments, there is an additional benefit in reducing their obligation annual tax on capital: Can Funding to save money

One last tip. As a non-resident property in Spain, it is imperative that all holders of the title will Spanish / Testament. The reason is very simple, allows for the smooth adoption and economic assets that covers the Spanish (and can be written only applies to goods in Spanish). Although foreign wills are accepted and can be run in Spain the process associated with translation and notarization is a nightmare for say nothing of the expenses.

Mallorca Travel: Large Country Property & Pool surrounding Finca Son Pont