New Year, New Inheritance Tax in Andalusia

Gaucin 186-00480P
Gaucin 186-00480P
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New Inheritance Tax in Andalusia. Good news to start the New Year 2018! The Junta de Andalucía has now approved a law to lower the inheritance tax in Andalusia. This means from the 1st of January, 2018, parents and spouses, children and grandchildren will not pay tax on the first 1.000.000€ inherited. 

Inheritance tax

This is very good news for property owners and purchasers in Andalusia as well! The first one million euros inherited by next of kin, that is to say, spouses, children, grandchildren and parents; is free of tax. And those who inherit over that limit will only be taxed on the difference. We also must bear in mind that the million euros is computed not by inheritance, but by heir. For example, in the event that a father leaves up to two million euros distributed in different goods to his two children, they wouldn’t have to pay the tribute. Up until now, the limit was 250.000€ per heir.

Biggest tax reform in Andalusia in 35 years

Inheritance tax is a tax paid by a person who inherits money or property or a levy on the estate (money and property) of a person who has deceased. This is otherwise known in Spanish as “IMPUESTO DE SUCESIONES Y DONACIONES (ISD)”. The former high rates had a grave effect on Andalusia,  where in the past some would turn down their inheritance being unable to pay steep taxes on for example inherited property.

But now, all of this has radically changed, thanks to political pressure,  the biggest tax reform in Andalusia in 35 years has taken place.  This means that most of the properties in Andalusia will be exempt. Yet another reason to purchase in Andalusia.

Do your former assets count? Yes. To benefit from the exemption, the heirs own assets have to be less than 1 million euros. Under the old law, the boundary was set at 402.678,11 euros. So again, an improvement.

How does this reform affect gifts?

In Andalusia, gifts are more expensive than inheritances, among other reasons because the regional regulations include less reductions in the inheritance and gift tax. The Junta de Andalucía establishes a 99% exemption on gifts of money from parents to their children or descendants that is entirely destined to the purchase of the first habitual residence, as long as the donee is under 35 years old or has a disability equal or greater than 33%.

The agreement introduces a change when the purpose of the donation is to create a business or expand it. Once again, the barrier of one million is established. Donations between direct relatives (parents and children) up to this amount are not taxed, providing that the full amount of the same are intended for the establishment or expansion of an individual company or business.


Rebecca Marriott | 17th January 2018