Inheritance tax under 1%: become a property owner in the Alicante Region.
Understanding Inheritance Tax in the Alicante Region: A Boon for Property Owners and Heirs
As the allure of purchasing property in the Alicante region continues to grow, favorable news has emerged regarding inheritance tax. Recent changes to regional tax laws have made inheriting property in this beautiful part of Spain significantly more advantageous than in many other areas of the country.
Whether you are a resident or non-resident, the inheritance tax reliefs in the Alicante region have dramatically improved, making it an excellent place to own real estate. In this article, we’ll explore why this is positive for property owners and their heirs.
One of Spain’s Most Favorable Regions for Inheritance Tax
The Valencia region, which includes Alicante, has consistently worked to reduce the burden of inheritance tax for heirs. In fact, the Valencia region is now ranked as one of the most favorable regions in Spain when it comes to inheriting property. Thanks to a series of generous exemptions and reductions, many beneficiaries—particularly direct family members such as children and spouses—may end up paying little to no tax on their inheritance.
Generous Exemptions for Children and Spouses
If you’re inheriting property as a child or spouse, you fall under Group II Beneficiaries, which grants you significant tax relief:
- Basic Exemption: As a child (over 21) or spouse inheriting in Valencia, you are entitled to a €100,000 exemption on the inherited estate.
- 99% Tax Reduction: The Valencia region provides a 99% reduction on the taxable value of the inheritance for children and spouses. This means that after the basic exemption, only 1% of the remaining inheritance value is subject to tax. Essentially, you only pay tax on 1% of the property’s value after the first €100,000 is deducted.
Example: If a child inherits a property worth €500,000, after applying the €100,000 exemption, the taxable amount is €400,000. With the 99% reduction, they only need to pay tax on €4,000—an incredibly low amount for such a high-value inheritance.
Favorable Changes for Non-Residents, Including UK Heirs Post-Brexit
A significant update in inheritance tax laws is that non-residents, including those from non-EU countries such as the UK, USA, Canada, and Australia, now have access to the same generous exemptions as residents. This is excellent news for international property owners and their heirs.
Prior to 2018, only residents of EU countries could benefit from these regional exemptions, but recent changes in Spanish law, supported by rulings from the European Court of Justice, have extended these benefits to all non-EU residents. This means that even if you live outside the EU, you can still take advantage of Valencia’s tax-friendly inheritance rules.
For UK residents, this was especially crucial after Brexit. Thankfully, the Valencia region allows UK heirs to inherit property without facing the heavier national tax rates.
Key Points for Property Owners in the Alicante Region
If you own property in Alicante or are considering buying, these favorable tax conditions make the Alicante region one of the best places in Spain to invest in real estate from an inheritance perspective. Here’s why:
- Substantial Exemptions for Close Relatives: Children and spouses can enjoy €100,000 exemptions and 99% tax reductions.
- Inclusion of Non-Residents: Even if you or your heirs are non-residents, you can still benefit from regional exemptions, making inheritance tax nearly negligible.
- Post-Brexit Relief for UK Heirs: UK residents can inherit with the same favorable conditions as EU residents, making Alicante property ownership attractive for British buyers.
- Potential for Additional Reductions: If you’re inheriting a family business or a primary residence, there could be additional deductions, further reducing the tax liability.
Avoid Overpaying: File Correctly to Claim Regional Exemptions
One of the most common mistakes made by heirs, especially non-residents, is overpaying inheritance tax. Non-residents are required to declare their inheritance with the national tax office, where rates are higher and exemptions are fewer. However, they can claim the regional exemptions of the area where the majority of the assets are located—like the Valencia region.
It is crucial to consult with a knowledgeable tax advisor to ensure you file correctly and fully benefit from these exemptions. The difference could save you thousands.
Verified by Legal Expert
This article has been reviewed by Fau Legal Advisors, Fau Legal advisors,
based in C/Francisco Atienza Ferrandez nº26, Torrevieja.
Mail: direccion@faulegal.com Telf: +34 965 270 350. Web Address: www.faulegal.com
Final Thoughts
The Valencia region has made significant strides in creating a tax-friendly environment for heirs, particularly when it comes to inheriting property. For families, this means peace of mind knowing that your property investments will not be heavily taxed when passed down to loved ones.
If you are considering investing in real estate in Alicante, now is a great time. The favorable inheritance tax laws are a significant bonus, especially for families and international property owners.
Fiona Caulfield
