QUESTION:
My brother and myself recently inherited a villa in Fuengirola worth 400000 euro. I agreed with my brother that he keep the property and I would compensate him.
We discussed this with our solicitor and with this as the background agreement we assisted the notary and we both signed a deed in which I renounced in his favour and he accepted the inheritance of the house, half directly and half due to me renouncing my half in his favour.
The solicitor is now saying that the tax office is claiming that in respect to my half two taxable transactions have taken place. 1.They tax the inheritance of half by my me and then tax a donation to my brother .
Is this correct ?
Answer:
I am afraid you have made a very expensive mistake.
What the tax office is claiming is correct, as in Spain if you renounce and establish the new beneficiaries on the deed then the tax office taxes the transaction twice (inheritance+donation).
The best solution depending on the way the will was worded would have been ?
Option 1. If the will states that everything goes to the two of you with the right to accrue the other , then you could have signed a full unconditional renunciation to your fathers estate (which is not taxable as long as it is unconditional ) in which case the next in line according to the will would have been your brother (withoght you having to name him which would have made it a donation) who would have inherited the complete property directly from your father.
Option 2.. If the will stated that you are both the heirs and then as a second step the grandchildren, then solution A. would not work , but in this case you should have both inherited as stated on the will and then you could have signed a deed to resolve the joint ownership which is much cheaper then a donation.
The only angle to your situation now would be to speak to the tax office to see if their is any way you can sign a deed of modification at the notary claiming that you made a mistake.
